Evolution of post-crisis bank regulations and controlling tools: a systematic review from a historical aspect

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Amongst other causes, the excessive and uncontrolled credit growth, the high levels of leverage with insufficient high-quality capital funding, the high degree of systemic risk accompanied with the inadequate capital buffers and the insufficient liquidity buffers and excessive exposure to liquidity risk (Coen, 2016) in the early 2000’s led to first global financial crisis of the millennium in 2008–2009. Although there has been a global effort to consolidate the financial markets, different countries had different levels of regulatory response to the financial crisis, which resulted in different speed of recovery and impact on internal management control processes. This paper delivers a comprehensive review of the key global changes in the financial market and banking regulations since the 2007–2008 financial crisis by conducting a systematic review of the published papers, directives and regulations of the global, especially the new and existing American, European and Ukrainian financial regulatory bodies and International Organizations such as the Basel Committee, IMF, FSB, EU Parliament and Commission. Trend analysis provides some evidence for the stabilization effect of the new regulations, especially in case of countries with stricter supervisory frameworks (such as the Basel Standards). Finally, the impact of the regulatory environment’s changes on the existing internal controlling systems and functions of financial institutions is assessed by comparing the key pre- and post-crisis states of the different management control functions.

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    • Figure 1. Comparison of CET1 capital requirements under Basel III and Basel II
    • Figure 2. Impact of post-crisis regulations on bank stability (trend of non-performing loans)
    • Figure 3. Impact of post-crisis regulations on bank stability (trend of capital to RWA)
    • Таble 1. Comparison of pre- and post-crisis bank control functionalities