The globalization of financial markets, information technology development, and increasing competition have largely affected bank business and its risk management. Together with these forces, regulatory factors play a significant role. This chapter approaches bank risk management under the regulators’ perspective with an emphasis on the risk-based capital regulation. Specifically, how bank risk is regulated under the risk-based capital regulation and whether the regulation shapes bank risk are discussed in detail. In such a way, the chapter provides better understanding of the risk-based capital regulation and bank risk-taking behaviors.
Part of the book: Perspectives on Risk, Assessment and Management Paradigms