Banking risk supervision from bussiness cycle based on financial programming

Abstract

With the aim of restraining the negative effect from business cycle, especially, in recession period; strengthening the ability of banking system to absorb with economic shocks and weakening the crash probability in financing system as well as national economy, Basel Committee on Banking Supervision had conducted related researches and decided to imply the “countercyclical capital buffer”. However, the demand of “countercyclical capital buffer” can increase the minimum capital adequacy ratio regulation faced by the reaction of banks. On above situations, some countries gave out alternatives as in the case of Thailand, banking supervisors try to manage the pro-cyclicality with the credit-on-GDP ratio, rather than apply “countercyclical capital buffer” along with Basel Committee’s recommendation. 

Our research will direct to the signification of the credit-on-GDP ratio and imitate the execution process of risk supervision on banking system from business cycle based on financial programming