Requirements Of Basel Research Articles

The drivers of liquidity risk in the GCC dual banking sector: the impact of the bank’s business model

Purpose Considering the influence of the bank’s business model, this study aims to explore the drivers of liquidity risk in the dual banking sector of the Gulf Cooperation Council (GCC) using the two new liquidity requirements of Basel III, Net Stable Funding Ratio and Liquidity Coverage Ratio, as indicators of liquidity risk. Design/methodology/approach For 61 GCC banks between 2018 and 2022, this study applies the random effects model with an interaction dummy variable technique. Findings Islamic banks in the GCC region tend to have a significantly lower level of Basel III liquidity requirements, meaning that they are struggling to meet the new Basel III liquidity requirements as they lack an adequate liquidity risk management framework. The liquidity of GCC banks decreases with size; this relationship is linear for conventional GCC banks but not linear for Islamic banks. Finally, the COVID-19 epidemic has exacerbated liquidity risk for GCC banks, with Islamic banks appearing to be the most impacted. The findings are robust to alternative variable selections and estimation techniques. Practical implications The findings provide useful insights to improve liquidity risk management practices in the GCC banking system, especially for Islamic banks. Targeted reforms may be needed to further develop Islamic banks’ liquidity tools and optimize their ability to withstand macroeconomic and systemic shocks. Originality/value To the best of the author’s knowledge, no single study considers the new Basel III metrics for bank liquidity or explicitly compares a wide range of liquidity factors for conventional and Islamic banks in the GCC region.

The cost efficiency of Polish banks driven by the ownership structure. Does the ownership structure matter?

This study investigates the influence of ownership structure on banks’ cost efficiency in Poland’s banking sector, emphasising the comparison between foreign, private, and state ownership. We use data from 2005 to 2021 to explore whether the ownership type impacts banks’ cost-to-income ratios. Our findings reveal that government and domestic-owned banks have higher cost efficiency than their private and foreign counterparts. The study also identifies other determinants that positively affect banks’ efficiency, including banks’ profitability, loan loss provisions, and solvency ratio, or that affect them negatively, such as implementing the Basel requirements and the banks’ age. These insights are critical for regulatory authorities, policymakers, and banking sector managers, highlighting the impact of ownership structure on bank cost-efficiency and the broader implications for the Polish banking industry’s competitive landscape and regulatory framework.

Economic Benefits, Enhanced Awareness, and Available Resources: What Factors Navigate Bank Readiness in Basel III Implementation

To maintain sustainable development, business management strategy of modern banks these days cannot neglect international standards. Hence, the main aim of the current study is to explore the factors that influence the readiness of banks in implementation of Basel III requirements based on the context of the Vietnamese banking system. To achieve clear explanations, this research utilizes the data set of 211 questionnaires collected from senior and middle-level managers as well as other management personnel related to Basel III implementation at 20 Vietnamese commercial banks, and performs the PLS-SEM by applying Smart PLS 3 software. The analysis results indicate that both awareness and expected economic benefits have positive impacts on the readiness of banks to implement Basel III requirements. Meanwhile, the effect of available resources is negative but not statistically significant. It can be said that the study provides one of the first evidence to shed new light on the factors that impact the readiness of banks in complying with strict requirements of Basel III, at least in the Vietnamese context. Hence, the findings are expected to provide the helpful guidance for banking leaders and policy-makers in Vietnam, where the banking system is ongoing reform to meet the international standards.

Testing how banks generate credit in the USA under the Basel III framework

This paper revisits the determinants of the loan generating process as it is revealed through the idiosyncratic role of banks, in the case of the United States. Specifically, if banks are primarily mainstream “financial intermediaries”, then their financial role is expressed through a credit growth process emanating from the reserves of banks, in the period before Basel requirements, and from banks' equity during the era of Basel I, II & III restrictions. On the other hand, if banks are primarily “credit and money creators”, as an heterodox point of view would have it, then every proxy of the aggregate demand (AD) needs, is expected to play a leading role in the credit creation process. The innovative liquidity risk ratios, like LCR & NFSR, brought new instruments in this debate thus, extending the alternatives between the two extremes. Hence, the combination of a predominant role for AD needs along with acknowledgment of liquidity restrictions as drivers of credit growth, characterises an eclectic approach. According to our empirical results, credit to both US firms and households, is primarily driven by aggregate demand (AD) factors. Solvency and liquidity risk ratios do play a role, during the examined period but the overall results are closer to the eclectic approach, concerning the role of US banks, which seems to be more encompassing and realistic.

BASEL III ADOPTION IN EMERGING ECONOMIES: AZERBAIJAN’S PERSPECTIVE

The main purpose of the research is to assess the current state of the transition to Basel III standards in Azerbaijan, to assess the level of readiness of the banking sector for the transition process, and to assess the potential costs and benefits. Conducting a multifaceted methodology, the research incorporates both qualitative and quantitative methods such as comparative analysis of legislation, the Herfindahl-Hirschman Index (HHI) method, calculation of compliance costs, expert interviews, a decade-spanning analysis of the sector's development, and a thorough deployment of descriptive statistics. The unique challenges and approaches are also addressed in developing countries like Azerbaijan where the leading global trends differ significantly. The emphasis here is on the knowledge of how Basel III criteria influence the banking industry in Azerbaijan with regard to both technical demands and regulatory realities. The research indicated that though the requirements implemented under Basel III suggested enhancement of bank capital quality and risk management, there were also challenges associated with this approach including higher costs for regulatory compliance and capability restrictions on performing operations. As the main result of the research, it should be noted that important reforms were carried out in Azerbaijan in the direction of the transition to Basel III standards, the capital adequacy indicators of the Azerbaijani banking sector are lower than Basel III standards in terms of quality of assets and capital, however, quantitatively is higher than the requirements of Basel III. However, research show that there are serious differences in the banking sector terms of capital, while some banks have a high level of capitalization, some have very low capital adequacy indicators. Based on our calculations based on Cook ratio, banks need additional capital in the amount of 44 million manat (25,8 million USD, 1% of the total capital of the banking sector, 0.03% of GDP) to meet the Basel III standards on total capital adequacy ratio alone.

The role of the core requirements of Basel 3 Committee's decisions in improving internal audit quality under corporate governance in Jordanian commercial banks

The role of the core requirements of Basel 3 Committee's decisions in improving internal audit quality under corporate governance in Jordanian commercial banks

Analyze the Efficiency of Banking Risk Management in Banks Operating in The Local Environment Through the Application of Basel Standards in Financial Risk Management

This article discusses the challenges facing the banking system in light of the development of the banking industry and the increase in banking competition at the local and global levels. The article notes that banking risks are no longer limited to credit risks, but also include market risks, liquidity, interest rates, operational risks and others. Based on this development, it has become necessary for banking regulators and institutions to apply unified standards for managing these risks in order to protect the financial stability of banks and the financial system. The article highlights the role of the Basel Committee on Banking Supervision in setting these standards and motivating banks to implement them to ensure the safety of banking systems. The article also notes the importance of bank risk management to enhance the sustainability of banks and avoid the negative effects of risks. The research aims to review the concepts of banking risks and their importance, identify strategies to deal with them, and the extent to which banks comply with the requirements of the Basel Committee. The research shows hypotheses such as the importance of properly managing banking risks for the success of banks and achieving their goals, and the difficulty of applying Basel requirements in the banking environment. The study is chronologically limited to the period from 2014 to 2018, and spatially limited to analyzing the reports of the Rafidain bank in Iraq during that period.

A Comparative Study: The Banking Reforms in Indonesia, Thailand, the US, and the UK, and How it Affected the Banking Performance and the Economic

The banking crisis occurred as a result of the massive financial deregulation that lead the banks to expand their businesses on the large-scale and tends to increase the risk their portfolio, such as in the Asian and the US crisis. The aftermath of the crisis became the challenge for the government and regulators, as it required a tremendous amount of liquidity injection either from the international lender of last resort such as the IMF, or from the government (by using taxpayers money), undeniably it remains painful for the economic recovery. The banking reforms aim to strengthen the banks and the financial industry. There are numerous reforms agenda in every crisis, however this study focus on several issues that most often arises in every crisis. The most common issues are; (1) the presence of deposit insurance institution protecting the depositor's money to reducing public panics, and bank runs, (2) ensuring sufficient capital as a buffer to the crisis and liquidity management by adopting the Basel requirements. By comparing the banking reforms in the US, the UK, Indonesia, and Thailand, this study aims to give insight which reforms were the most effective to address the crisis and had an impact to the bank's performance, particularly in the profitability and also the economic performance, by measuring loan to GDP ratio. The result of this research are the banking reforms to some extent, have had a positive impact on the banking profitability in emerging countries. However, in the developed countries, the financial crisis and the banking reforms were not necessarily affected the recovery of the industry. Meanwhile, the banking reforms that focus on strengthening the regulation could slow down the economic growth as the banks become more prudent in giving the new loan. However, lowering the net interest margin could boost the lending growth. In the end, the policies recommendation are implementing the risk-based premium scheme on deposit insurance institution, and the implementation of counter-cyclical capital variation on the capital requirement.

The effect of macroprudential regulation on banks’ profitability during financial crises

This study aims to investigate the effect of macroprudential regulation on banks’ profitability during financial crises, to find out whether the instruments of the Central Bank of Jordan (CBJ) enhance the performance of the Jordanian banking sector in terms of increasing banks’ profitability and reducing banking sector exposure to financial crisis vulnerability. The sample of the study consists of twelve listed banks in Jordan over the period 2000–2018. The bank’s return on assets (ROA) was regressed on instruments by using the fully modified ordinary least square (FMOLS) method. The results had shown a slightly weak significant effect of stress testing (ST) on the banks’ ROA. Capital adequacy ratio (CAR) had no significant effect, leverage ratio had the deepest effect, and banks are highly leveraged with more debt-to-equity ratio. In addition to that, a good number of the banks maintain CAR, loan-to-value (LTV), and leverage ratios higher than the minimum limit required by the CBJ and Basel requirements, suggesting that the Basel standards did not take into consideration the particularity of some countries. The results also revealed that CBJ prudential regulation instruments are succeed in keeping the stability of the banking sector profitability during previous financial crises, but still need to enhance the level of gearing for banks against future shocks

Basel accord capital regulations and financial risk management: Empirical evidence from Pakistan’s financial institutions

The Pakistani banking sector has shown tremendous growth in the last two decades and witnessed strategic reforms including the implementation of Basel regulations. The objective of this study is to investigate the effect of Basel capital regulations on the various proxies of the financial performance of the Pakistani commercial banks. This study uses three different proxies to assess the effectiveness of the Basel capital regulations on the financial performance of Pakistani commercial banks from 2006 to 2018 and quantifies the effect of different Basel accords on the banking sector of Pakistan using the dynamic panel data estimation technique. In addition, the effect of the Global Financial Crisis (2008) on the financial performance of Pakistani banks has also been evaluated. The results indicate that Basel II and Basel III capital regulations have affected the banks’ profitability differently. Capital regulations of Basel II have increased the performance while capital requirements of Basel III have not affected the financial performance of Pakistani banks, pointing towards the ineffectiveness of Basel III capital regulations. Besides, there has been no change observed in the financial performance of Pakistani banks during the Global Financial Crisis (2008). Overall, the results of the Generalized Method of Moments (GMM) technique show that Basel capital regulations enhance the financial performance of the Pakistani banking sector.

Investigating the disclosure compliance of Basel III in emerging markets: a comparative study between UAE and Indian banks

PurposeThis study aims at investigating banks’ compliance with the disclosure requirements of Basel III in two emerging market economies, namely, the United Arab Emirates (UAE) and India. This study also examines the impact of economic factors on the extent of disclosures.Design/methodology/approachThe authors compare the Basel disclosure practices between UAE and Indian listed banks and have used panel data regression models to investigate the compliance and level of reporting based on three market variables, namely, size, leverage and profitability of listed banks.FindingsAfter examining Basel reporting for each of three categories of independent factors, size was found to be the predominant factor influencing the Basel disclosures, followed by profitability and degree of financial leverage. It is prudent for all the banks irrespective of size to capitalize on themselves with an intent to tide over the frequent economic crises and prevent every economic crisis from becoming a full-blown financial crisis.Practical implicationsThe findings suggest that there is an urgent need for a high level of concerted action in the context of listed banks in the selected emerging market nations to direct more resources to ensure full compliance with Basel III. The findings inform practitioners in emerging countries of compliance and plan expanded future applications. Investors should consider the BASEL compliance level of Banks before parking their funds in the bank’s stocks. The banks having a higher degree of compliance are expected to be safer than their counterparts having lower Basel compliance.Originality/valueMany previous studies have examined the implementation of Basel III in general. This study is specific in assessing the compliance with disclosure requirements as prescribed by Pillar III of the Basel norms. To the best of the authors’ knowledge, this is the first research to compare market discipline in emerging markets. Existing studies have either assessed the level of compliance in one individual or similar types of markets. However, this study made a pioneering attempt to compare two different countries in the same category (emerging markets).

Concurrent 12. Presentation for: Recycling of Australian oil and gas assets, an Australian Basel-compliant solution

Presented on Wednesday 18 May: Session 12 Australian offshore petroleum infrastructure decommissioning strategies are dictated by legal requirements set out in the Offshore Petroleum and Greenhouse Gas Storage Act, requiring prima facie that assets are removed from the title area. Legally, once assets are decommissioned, they require disposal at a Basel-compliant facility. This lack of Australian capability has forced titleholders to contemplate leaving infrastructure in situ (rigs-to-reef), which may well breach Australia’s international law obligations under the United Nations Convention on the Law of the Sea, and the London Convention on Dumping at Sea (and associated Protocols). Australia’s closest Basel-compliant facility is located in Turkey. The experience of the Iron Chieftain in 2019 demonstrated the difficulty in using this facility. In 2019 the bulk carrier Iron Chieftain caught fire in Port Kembla, and was declared a Constructive Total Loss (CTL). Disposal required decontamination, seeking Basel export approval, and towing to Turkey via South Africa. Following 9 months to complete the application, the vessel commenced its tow. The vessel was not permitted to stop or enter the port waters of any port other than Turkey after leaving. If it did stop, the application ceased and a new application was required to be commenced. If the vessel arrived in a condition not acceptable to authorities, the vessel would be turned away, requiring it to return to its home port of Port Kembla where the application commenced from. In response to such difficulties, a new Basel-compliant recycling facility has been established, co-located to a green steel recycling works, delivering a near carbon-neutral asset recycling and disposal solution for Australia’s offshore energy infrastructure. Strategically located in the mouth of the Spencer Gulf, South Australia, this facility will provide a green whole-of-asset recycling and disposal solution in-country, removing towage expenses and CO2 emissions. This extended abstract articulates the Iron Chieftain experience, highlighting the issues facing petroleum infrastructure decommissioning and disposal in accordance with Basel requirements. It also provides an overview of the Whyalla recycling and disposal facility, presenting the case for circular economy, ethical asset decommissioning and Australian capability. To access the presentation click the link on the right. To read the full paper click here

Recycling of Australian oil and gas assets, an Australian Basel-compliant solution

Australian offshore petroleum infrastructure decommissioning strategies are dictated by legal requirements set out in the Offshore Petroleum and Greenhouse Gas Storage Act, requiring prima facie that assets are removed from the title area. Legally, once assets are decommissioned, they require disposal at a Basel-compliant facility. This lack of Australian capability has forced titleholders to contemplate leaving infrastructure in situ (rigs-to-reef), which may well breach Australia’s international law obligations under the United Nations Convention on the Law of the Sea, and the London Convention on Dumping at Sea (and associated Protocols). Australia’s closest Basel-compliant facility is located in Turkey. The experience of the Iron Chieftain in 2019 demonstrated the difficulty in using this facility. In 2019 the bulk carrier Iron Chieftain caught fire in Port Kembla, and was declared a Constructive Total Loss (CTL). Disposal required decontamination, seeking Basel export approval, and towing to Turkey via South Africa. Following 9 months to complete the application, the vessel commenced its tow. The vessel was not permitted to stop or enter the port waters of any port other than Turkey after leaving. If it did stop, the application ceased and a new application was required to be commenced. If the vessel arrived in a condition not acceptable to authorities, the vessel would be turned away, requiring it to return to its home port of Port Kembla where the application commenced from. In response to such difficulties, a new Basel-compliant recycling facility has been established, co-located to a green steel recycling works, delivering a near carbon-neutral asset recycling and disposal solution for Australia’s offshore energy infrastructure. Strategically located in the mouth of the Spencer Gulf, South Australia, this facility will provide a green whole-of-asset recycling and disposal solution in-country, removing towage expenses and CO2 emissions. This extended abstract articulates the Iron Chieftain experience, highlighting the issues facing petroleum infrastructure decommissioning and disposal in accordance with Basel requirements. It also provides an overview of the Whyalla recycling and disposal facility, presenting the case for circular economy, ethical asset decommissioning and Australian capability.

The specifics of the banking regulation and supervision model in Iraq and its transformation under the influence of the Basel requirements

Today it is difficult to imagine modern life without banks. Banks play an important role not only in the lives of individuals, but also in general, in the global economy. The efficiency of the banking system is of great economic importance. Based on this the importance of the banking system applying the rules and decisions of the Basel Committee, can ensure that the banking system can avoid the risks that can lead to entering a crisis and serious intransigence is necessary. The Iraqi banking system must comply with the decisions of the Basel Committee, both internal and external. Therefore, this article examines the specifics of the model of banking regulation and supervision in Iraq and its transformation under the influence of the requirements.

Impact of Capital Adequacy on Bank Stability in Lebanon

This research paper intention is to study the capital adequacy requirements in the Lebanese banks and the effect of this ratio on the financial stability. Capital adequacy ratio and Altmans z-score (representing stability of banks) were collected from a sample of 8 Lebanese banks in the time between 2009 to 2018. The collected data is analyzed using SPSS software to reach conclusions that serves the topic of study. 8 simple linear regressions are conducted, among a confidence level of 95% and a level of error 5%. Each simple regression has a dependent variable (Altman’s Z-score) which represents the stability of the bank, and an independent variable (Capital adequacy ratio). The results show that almost in all banks (except bank MED) there was no significant impact of CAR on the stability of the banks. This result shows that the commitment of Lebanese commercial banks under the monitoring of the central bank was not enough to keep the financial system stable, which is a logical conclusion after what happened in 2019 where the financial system has collapsed and the commercial banks faced a severe crisis in its liquidity and reputation. Although the central bank in Lebanon was in a full compliance with Basel requirements concerning minimum capital over years, the Lebanese banking sector has collapsed and bankrupted. Also, depositors were not protected and they lost their deposited money in the bank. In other words, capital requirements in Lebanon did not prevent banks from engaging in excessive risk-taking and enhance financial stability. Thus, the problem of the Lebanese banking sector could be mismanagement, concentration of the loans portfolio in Eurobonds and with the central bank, and many other factors that caused the financial collapse in Lebanon.

Financial Ratios : A Tool for Computing Probability of Corporate Default

Financial institutions want to draw upon a pool of borrowers having a high capacity of making repayments to ensure a smooth lending process. Before lending, financial institutions can assess their prospective customers using various tools such as customer interviews, visits, ratings from external credit rating agencies, financial analysis, and internal ratings along with risk mitigation through securities and collateral, as guided by the regulators and Basel committee. Basel accord suggests an internal rating-based approach where banks are allowed to estimate the borrower’s probability of default, internally. Multivariate statistical approaches such as logistic models is widely used for finding the probability of default models by banks. The current study covers the development of probability of default model after using financial ratios as predictors. Results reveal that financial ratios have a significant impact on the firm’s probability of default, except cash flow ratios. Fitted probability of default model can be utilized in any corporate lending firm for the assessment of its strength and its ability to pay back the loan. Probability of default model meets the State Bank of Pakistan (SBP) and Basel requirements for the implementation of internal rating based approaches in the case of conventional Pakistani banks. Credit risk rating and expected credit losses can be calculated using fitted probability of default model. This study was executed only based on financial ratios because of the availability of financial data only. Conventional banks use managerial, business and economic factors along with financial ratios to construct better predictive models. The current study was conducted on limited data adopted from financial statements analysis published by SBP. The developed model in this study is suitable for all non-financial corporates. Future researchers may develop different models for different industries, for instance, manufacturing and trading.Keywords: financial ratios, default, Basel, internal rating

Post-crisis regulations, market making, and liquidity in over-the-counter markets

We augment a simple inventory model with new features of the post-crisis regulations to offer new predictions on the effects of post-crisis regulations on the over-the-counter markets. First, the increased capital requirements of Basel III lead to an overall increase in order rejection rates of large orders. Second, and more importantly, the effects on order rejection rates depend on the risk weights used in calculating risk-weighted assets (RWAs). More specifically, the increase in order rejection rates is more severe for assets with higher risk weights, but less severe for assets with lower risk weights. In fact, for the cases of the lowest risk weights, simulations suggest that we may even see a decrease in order rejection rate. Third, the price impact of assets with higher risk weights increases, while the price impact of assets with lower risk weight decreases in the post-regulation period. Overall, our paper points to an important unintended consequence of the post-crisis regulations—the re-distribution of liquidity among assets with different risk weights assigned to them.

Is capital conservation buffer or regulatory leverage better at improving bank efficiency? The case of an emerging market

Purpose This paper is motivated by the heated debates preceding the introduction of additional regulatory requirements of Basel III on capital conservation buffer (CCB) and regulatory leverage (RLEV) in banks of emerging markets. The paper aims to examine which policy ratio can improve bank efficiency (BE), in one of the most resilient banking settings in the Middle East and North Africa (MENA) region. Design/methodology/approach The analysis is performed on a sample of 13 banks for the period 2010–2018 in Egypt and proceeds in two steps. In the first step, the data envelopment analysis model is used to derive bank-specific efficiency scores. In the second step, BE scores are regressed on the two types of regulatory capital and a set of control variables. Findings The paper is motivated by regulatory debates on the viability of RLEV and CCB in enhancing BE. The results show that higher RLEV and CCB are associated with a reduction in BE and that RLEV is highly associated with BE compared to CCB. Hence, results are relevant to policymakers in designing measures for improving BE in emerging markets. Originality/value The findings contribute to a small but growing stream of research on capital adequacy in emerging markets. This study provides results on the viability of risk-based vs non-risk-based capital requirements. The findings are also relevant to bank regulators in similar emerging market settings in their efforts to introduce and phase in minimum leverage requirements according to Basel III.

CURRENT TRENDS IN ANTI-CRISIS MANAGEMENT OF THE BANKING BUSINESS

Introduction . The global financial crisis of 2007-2008 gave impetus for global changes in the banking business in the world, caused a total revision of capital reserve norms, serious changes in the economic, credit and financial spheres, as well as structural changes in the banking services environment and increased requirements for liquidity and stability of financial institutions. Large international banking groups were forced to adapt to the new competitive environment, which is characterized by a significant decline in profitability indicators, revolutionary shifts in the financial services market associated with the introduction of new banking products and the emergence of new players in the banking market. Purpose Analysis of the main trends in the development of anti-crisis management in the banking business and the formation of models for early warning of banking crises. Results . Based on the analysis of the role of state capital in the banking system in many countries, the article focuses on the significant share of state capital in the Ukrainian banking sector, where the share of state-owned banks is several times larger than in Eastern European countries. Despite the fact that the share of state-owned banks in net assets continued to decrease during 2020, more than half of the assets of the Ukrainian banking system belong to state-owned banks. Therefore, the article proposes the development of a state strategy for the privatization of state banks in Ukraine. It was argued that in order to avoid or at least mitigate the consequences of future financial crises, it is necessary to formulate a clear theoretical and economic basis for the driving factors of the crisis and to have effective models for their early warning. The article shows that such models should show in the early stages of an increase in financial imbalance and systemic risk in the country's economy. Originality. The article analyzes modern trends in the development of anti-crisis management systems in the banking business in the context of the new requirements of national and international regulators and standards III. Special emphasis was placed on comparing the features of anti-crisis management in banking in Ukraine, global systemically important banks and the banks in countries of Eastern and Central Europe. Conclusion. The analysis showed that banks have made significant changes to their business models since the global financial crisis. The profitability of almost all business lines of banks has become significantly lower than the pre-crisis indicators, while the greatest decrease in profitability is observed in investment and corporate banks, which were most affected during the crisis and faced the most significant increase in the requirements of Basel III and national regulators. A significant part of the state capital in the Ukrainian banking system carries many risks in the long term, since such a policy of mass nationalization of commercial banks and, as a result, the domination of state capital in the banking business may make sense only in the short term, while in the long term it can lead to a decrease in the efficiency of banking sector.

Impact of the Basel IV framework on securitization and performance of commercial banks in South Africa

Securitization has been used as a tool for bank funding, liquidity, risk management, and performance for over two decades. However, securitization activities were negatively affected by the recent financial crises, which led to stricter regulations of banks’ off-balance-sheet activities. This study examined the possible impacts of the Basel IV capital requirements on securitization activities and the performance of commercial banks in South Africa if implemented. The study used aggregated financial data of selected South African commercial banks to create a sample representative projection as if the selected banks had implemented the Basel IV capital requirements between 2002 and 2018. The simulated data were analyzed and compared to Basel III data using panel data analysis under certain assumptions, while other conditions held constant. The results revealed that the implementation of the Basel IV capital requirements will have a significant positive impact on securitization activities of commercial banks in South Africa. However, higher capital requirements of Basel IV may have no significant impact on performance of securitizing banks but it can protect banks from securitization exposure.