Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/101042
Authors: 
Wall, Larry D.
Year of Publication: 
2013
Series/Report no.: 
Working Paper, Federal Reserve Bank of Atlanta 2013-14
Abstract: 
The Basel capital adequacy ratios lost credibility with financial markets during the crisis. This paper argues that failure was the result of the reliance of the Basel standards on overstated asset values in reported equity capital. The United States' stress tests were able to assist in restoring credibility, in part because they could capture deterioration in asset values. However, whether stress tests will prove equally valuable in the next crisis is not clear. Some of the weaknesses in the Basel ratios are being addressed. Moreover, the U.S. tests' success was the result of a combination of circumstances that may not exist next time.
Subjects: 
Basel capital ratios
stress test
financial crisis
JEL: 
G01
G21
G28
E50
Document Type: 
Working Paper

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