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Historically, there have been different ways for prudential regulation of banks. The current approach is by regulating the amount of capital banks should hold. What

Historically, there have been different ways for prudential regulation of banks. The current approach is by regulating the amount of capital banks should hold. What is the fundamental role of capital in bank management? Is the role of Tier 1 and Tier 2 capital different, and if yes how?

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