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Regulation of Financial Institutions – Fall 2015

Week Four Assignments and Readings

Themes for Week Four: This week will turn our attention to the right hand side of the balance sheets of depository institutions. We will start with a quick review of the materials on deposits and deposit insurance assigned for Week Three. Our primary focus this week will be a discussion of capital regulation. We will begin with an HBS case that explores the relationship between loan losses and capital requirements, as well as an early enforcement action related to capital directives. After working through an exercise designed to illustrate how capital requirements are calculated, we will explore the innovations of Basel II and Basel III, and also explore international implications of setting capital requirements on a global basis.