Journal of Banking Regulation 

About: Journal of Banking Regulation is an academic journal published by Palgrave Macmillan. The journal publishes majorly in the area(s): Basel I & Corporate governance. It has an ISSN identifier of 1745-6452. Over the lifetime, 492 publications have been published receiving 4924 citations.

Risk disclosure: An exploratory study of UK and Canadian banks

Abstract: It is important that stakeholders receive relevant information to be able to understand the risk profile of any financial firm they have an interest in. This study examines risk disclosure practices within annual reports of Canadian and UK banks; these being chosen because of the relatively advanced state of the risk disclosure debate within the respective countries. The paper analyses and classifies the risk information communicated by the sample banks and discusses the nature of the risk disclosures. The usefulness of current disclosures is questioned as relatively little quantitative risk information is disclosed and there is a very strong bias towards disclosing past rather than future risk-related information. Risk disclosure is still evolving within the academic literature and therefore suggestions are made for further empirical research.

Bank capital and credit risk taking in emerging market economies

Abstract: The primary purpose of this paper is to investigate the relationship between bank capital and credit risk taking in emerging market economies. It also investigates the influence of several regulatory, institutional and legal features on the relationship between risk and capital. The paper applies a simultaneous equations framework following Shrieves and Dahl (1992) and Jacques and Nigro (1997). The results corroborate the existing findings for US and other industrial economies, putting forward the impact of capital regulation on banks' behaviour. The paper also shows empirical evidence on the role of the regulatory, institutional and legal environment in driving bank capitalisation and credit risk-taking behaviour in emerging market economies.

Risks in Islamic banks: Evidence from empirical research

Abstract: This study attempts to ascertain the perceptions of Islamic bankers (chief financial officers and risk managers) about the nature of risks, risk measurement and risk management techniques in their banks. It covers 28 Islamic banks in 14 countries using a questionnaire survey. The results indicate that Islamic banks are mostly exposed to similar types of risks to those in conventional banks, but that there are differences in the level of the risks. The findings of the study have both theoretical and policy implications for the issue of transparency, with particular reference to risk reporting in Islamic banks.

Profit-sharing investment accounts in Islamic banks: Regulatory problems and possible solutions

Abstract: As interest-bearing deposits are not permitted by the rules and principles of the Islamic Shari’ah, Islamic banks typically raise deposits in the form of profit-sharing investment accounts. These accounts differ from conventional deposits not merely by virtue of the profit-sharing nature of the returns they offer, but also because the contact between the depositors and the bank is not a debt contract, and the deposits are in consequence not ‘capital certain’ (that is, the depositors are required to accept negative returns or losses). This latter characteristic leads to serious regulatory problems in jurisdictions where bank deposits are required by legal definition to be ‘capital certain’. More generally, the presence of such ‘puttable instruments’ in the capital structure of Islamic banks leads to complications in assessing their capital adequacy. In addition, the fact that the profit-sharing investment account holders are a type of equity investor without the governance rights of either creditors or shareholders raises a major problem of supervision. This article explains these problems in further detail, and proposes a solution in the form of a structural distinction between the Islamic bank in the narrow sense on the one hand, and the entity that manages the profit-sharing investment accounts on the other hand.

Risk-related disclosure practices in the annual reports of Portuguese credit institutions: An exploratory study

Abstract: This study assesses the risk-related reporting practices of 190 Portuguese credit institutions based on a content analysis of their individual annual reports for 2006. Risk-related disclosures are found to lack comparability because of different maturity time bands that report exposures to credit, market and liquidity risks; different Value-at-Risk and sensitivity analysis assumptions; and different practices for reporting capital structure and adequacy. The misalignment of quantitatively based disclosures and related narratives led to problems of relevance, reliability and understandability. We assess the extent to which reforms of risk-related reporting practices in 2007 in International Financial Reporting Standards and the Basel II Accord address each of the deficiencies identified. We highlight areas needing further reform, and recommend that Portuguese supervisory authorities adopt more effective enforcement mechanisms to broker compliance with minimum mandatory risk disclosure requirements.