Revised Basel III better reflects bank risk, research finds

Study says 2013 capital rules more in line with actual risk, but can be easily gamed

Reflection of building
True reflection: Basel III's updated rules allow for a better estimation of risk

The latest version of the Basel III capital rules is a better reflection of the true risks banks face than its predecessors, but the switch from value-at-risk to expected shortfall could have some negative consequences, according to recent research published in the Journal of Risk.

In a paper published this month, Harald Kinateder, a researcher at the University of Passau in Germany, compared minimum capital requirements under Basel II, the original 2010 version of Basel III, and its subsequent

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