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The need for liquidity and the capital structure of Swedish Banks following the financial crisis

International Journal of Finance & Banking Studies

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Title The need for liquidity and the capital structure of Swedish Banks following the financial crisis
 
Creator Nilsson, Victor
Nordström, Joakim
Bredmar, Krister
 
Subject Bank regulation
Basel Accords, Basel Committee, Liquidity, Capital structure, Financial crisis, Management Control
 
Description Banks had a large part in the developments taking place in the years after the outbreak of the crisis in 2007, as many banks had an excessively low capital base, involving too much risk in its businesses. In this study, the largest four banks in Sweden have been investigated. The financial crisis affected the banks differently, depending on the markets of expansion. Excessive risk-taking has been found, where one bank expanded aggressively into new markets and did not appreciate the risks on these new markets. CEO compensation and risk seeking boards are factors that might have caused such behaviour. All of the banks have made noticeable changes to their capital structure, increasing it annually, accompanied by a risk-reduction movement in their assets to improve the stability in most of the banks. The new regulation’s focus on both quality and quantity is in accordance with the views that are expressed in the framework. The banks have altered their goals to levels several per cent above the regulations, in contrast to before the crisis when they were often as close as possible. The impact of the new liquidity regulations has been limited, as the banks continue to work with their internal measures. The banks have all changed their view of capital ratio and liquidity, where many of the banks have doubled the amount of these posts and now find these measures to be both beneficial and a way to gain trust and stability. 
 
Publisher SSBFNET
 
Contributor —
 
Date 2014-04-18
 
Type info:eu-repo/semantics/article
info:eu-repo/semantics/publishedVersion
Peer-reviewed Article
 
Format application/pdf
 
Identifier http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/317
 
Source International Journal of Finance & Banking Studies (ISSN: 2147- 4486); Vol 3, No 2 (2014): April; 10-27
2147-4486
 
Language eng
 
Relation http://www.ssbfnet.com/ojs/index.php/ijfbs/article/view/317/315