Journal of Finance and Bank Management

Basel III Liquidity Regulation And Forthcoming Issues: Assessing Ovelall Picture Of The Liquidity Indicators In Turkish Banking
Assistant Professor Dr. Celal Tasçi

Abstract
Despite having adequate capital levels, many banks experienced difficulties during the early liquidity phase of the recent financial crisis since they did not manage their liquidity in a prudent manner. In response, the Basel Committee on Banking Supervision in 2008 published Basel III regulatory framework to offer detailed guidance on the risk management and supervision of funding liquidity risk. This study firstly reviews the Basel III liquidity requirements and the existing literature to assess the forthcoming potential issues, challenges and impacts during the transition perod of implementing new rules. Studies show relevant evidence that the actions mandated by the Basel III liquidity rules to create an eligible balance sheet structure can lead banks to low-level profitability. Specifically, our second focus will be on the overall picture of liquidity performance of Turkish banking. The figures reveal that growing credit volume in recent years increased depenendency on external funding resources providing appropriate conditions for liquidity risk and financial instability. The results tend to bring pressing need for timely policy measures and strategic actions in the following periods to recover arising liquidity problems.

Full Text: PDF     DOI: 10.15640/jfbm.v3n2a7