Basel III : amending basel II following the 2007-2008 financial crisis

Abstract

The following study investigates the role that Basel II has played in the 2007-2008 financial crisis. The issue became very critical after Basel II was considered as one of the causes of this crisis. During the 2007-2008 financial turmoil various shortcomings of Basel II were identified and therefore financial regulatory authorities assessed and are still assessing ways to deal with these shortcomings. The response of the Basel Committee for Banking Supervision is the drafting of Basel III which will be implemented over the coming years. Basel III is aimed at preventing the possibility of another financial crisis. This study seeks to examine the Basel III framework and try to assess whether this new framework fully answers the shortcomings of Basel II.