Financial regulators in Australia and overseas are requiring banks to raise additional capital. The benefits of this are understood in terms of reducing the risk of incurring the significant costs of another financial crisis. But there are potential costs from securing these benefits, in the form of unanticipated macroeconomic impacts as banks reduce leverage ratios...

This paper investigates the impact of mandatory risk disclosure on the design of foreign bank debt. The Basel II and III Accords require the public disclosure of bank regulatory information under the Pillar 3 or market discipline framework. The new information details bank risk exposures and management strategies, capital adequacy and remuneration practices to enhance...

As China’s financial system has become more complex and integrated, calls have intensified for structural reform. In particular, many commentators have called for China to move towards the twin peaks model of financial regulation along the lines of the experience in Australia. This paper explores the insights that China might glean from the experience in...

The Australian Financial System Inquiry (FSI) has identified ways to improve the efficiency and resilience of the Australian banking system. In particular, bank capital levels are expected to be unquestionably strong. However, limited empirical guidance on the size of such buffers exists. We analyse the impact of increased capital buffers on system resilience based on...

In the aftermath of the 2008 global financial crisis (GFC), and the catastrophic scale of regulatory failure, much attention has been paid to the various systems of financial system regulation currently in force. Of the total of four financial regulatory systems currently in use, ‘Twin Peaks’ has garnered the most interest, and gained widespread recognition...