ABSTRACT
In 1988 the Basle Committee on Banking Supervision published its report International Convergence of Capital Measurement and Capital Standards — known as the ‘capital accord’ — which established a basic regulatory framework for bank risk-based capital levels. While it has been generally held that the Basle rules have caused bankers to appreciate, and focus on, the need to measure and provide for the risk involved in their lending and investing activities, the detail of the framework has met with mixed reactions and strong views that the risk-based formula has significant shortcomings which undermine its usefulness.
