Subject :- CREDIT & RISK MANAGEMENT (FIN625)

The banking industry is highly regulated. On a country level, this industry is regulated by the Central Bank. However, internationally this industry is regulated by Bank for International Settlements (BIS). BIS was established in 1930. The purpose behind establishing this institution is to conduct research and examine problems linked to financial stability. From its establishment until now, BIS played various roles in stabilizing the worldwide economy. BIS comprises numerous committees, one of its committees is "BASEL Committee on Banking Supervision". So far, this committee has issued three accords, namely BASEL I, BASEL II, and BASEL III for banking supervision. The first accord is recognized as BASEL I. It was formulated in 1988. After that, the committee proposed numerous changes, and the second accord was issued in 2006, known as BASEL II. Due to the consequences of financial crises in 2007, the committee again proposed many changes in BASEL II. Finally, the latest accord was issued in 2013, known as BASEL III.

Required:

You are required to read the above-provided information and answer the following questions carefully.

1. Enlist the different types of shortcomings in BASEL II in contrast to BASEL III.

(Marks 2.5)

2. Describe in detail those shortcomings in BASEL II that forced the Bank for International Settlements to introduce BASEL III. (Marks 7.5)

Note:-Solve these question and please explain in detail in such a way that i will get 10/10 marks.