Globalization And The Evolution Of Bank Capital Regulation

This paper traces the evolution of bank capital requirements from the 1800s, when it was a simple ratio, to the complex models used in Basel I and II. It goes on to introduce Enterprise Risk Management and Economic Capital that is the future of bank capital. The new capital standards reflect the changing business models of banking, developments in financial engineering, and globalization. Thus, the evolving capital standards affect both developed and developing countries such as Chile.