Bank Capital Post 2008 Financial Crisis
January Carmalt
20 years: Research & banking
In this video, January examines the new regime for bank solvency subsequent to the financial crisis of 2008, taking a closer look at the ever evolving regulatory landscape for bank capital and hybrid instruments.
In this video, January examines the new regime for bank solvency subsequent to the financial crisis of 2008, taking a closer look at the ever evolving regulatory landscape for bank capital and hybrid instruments.
Bank Capital Post 2008 Financial Crisis
11 mins 16 secs
The 2008 global financial crisis led to material changes in the way bank capital is defined and calculated, and to more stringent capital adequacy regulations to ensure banks have sufficient capital to remain solvent without any need for taxpayer bail-outs. The specific trigger for the bankruptcy of Lehman Brothers in 2008 was an acute lack of liquidity i.e. an ability to refinance liabilities coming due and fund day-to-day activities. The acute liquidity crisis was directly precipitated by fears about the bank’s solvency.
Key learning objectives:
Define a bank’s basic capital structure today
Define bank solvency and understand why low solvency levels are a problem
Outline improvements that have been made to capital standards in recent years
January Carmalt
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