CONTROVERSIES OF BANK CAPITAL REQUIREMENTS REGULATION

The capital adequacy accords were created and have survived in a belief that their implementation has beneficial effects on the banking system stability. On the other hand, the past and the current trends testify their insufficient functionality in preventing instability of the sector. Nevertheless, the national and the supranational prudential authorities do not give up the capital requirements modification and obliging banks to comply with it. This paper aims to analyze and systematize the weaknesses of the aforementioned regulatory measure, which were identified in theoretical and empirical researches in the field, and thus, serve as a stronghold for a future discussion and a potential empirical quantification of the capital requirements effects.