ABSTRACT
This chapter explores one set of post-crisis regulatory reforms, namely rules affecting the capital and corporate structure of financial institutions. Micro-prudential regulation seeks to reduce the likelihood that a systemic institution fails and, in the event of failure, to mitigate its consequences. There is little doubt that the aforementioned reforms enhanced the capital adequacy framework by responding to a series of deficiencies that were exposed during the 2007–2009 financial crisis. A strict separation of retail and investment banking would entail the complete break-up of financial conglomerates, as investment and retail banking activities would have to be undertaken by completely separate corporate entities with no material share ownership links. Recovery plans aim to facilitate the rescue of the business of a troubled financial company as a going concern so as to avoid systemic contagion which may be triggered by a failure.
