Internal Capital Adequacy Assessment Process by Basel in commercial banks

Abstract

In Basel 2 (2004), a new definition on the framework of commercial banks’ internal capital adequacy assessment was introduced. This is ICAAP- Internal Capital Adequacy Assessment Process, which enables the financial stability in banks. In details, ICAAP requires banks to build up a process to identify, measure indivial risks and accumulative risks in banking then calculate the amount of Economic capital to cover these risks. This paper emphasizes on literature of ICAAP according to Basel 2 and gives suggestion to implement ICAAP in Vietnamese commercial banks.