Approach to Regulation and Identification of Systemically Important Banks

The global financial crisis has shown that the bankruptcy of systemically important financial institutions can lead to significant negative economic costs. The Basel Committee on Banking Supervision has developed a number of documents which provide for identification global and domestic systemically important banks, raising the capital requirements and liquidity of commercial banks. Firstly, these requirements have concerned systemically important banks which bankruptcy can have negative consequences for the entire financial system. At the same time there is a question how increased requirements to capital adequacy of bank can slow down economic growth in the country. In the first part of the research methods for identifying systemically important banks at the global level through the indicator-based method and the econometric models were considered. Moreover, the methods proposed by foreign countries and Russia to identify domestic systemically important banks were discussed. In the second part of the work, regulation of systemically important banks was considered. Most of all, the toughened requirements are aimed to increase the level of capital adequacy of the bank. There is an analyze of the studies devoted to the benefits and costs for the economy from the implementation of the new requirements of Basel III, in particular, the increase in the level of capital adequacy. The positive effect for financial stability has been revealed from the bank's capital adequacy level on the example of the Russian banking system. The important conclusion has been drawn that it is necessary to increase the level of capital adequacy of the bank including by increasing an extra charge for the systemic importance as it reduces probability of crisis. One of the promising directions of this subject is the analysis of the negative consequences from the introduction of increased requirements for the capital adequacy level.