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The Dutch system banks throughout the crisis. The Basel framework as a hampering factor on bank performance.

Poblocka, Iwona (2014) The Dutch system banks throughout the crisis. The Basel framework as a hampering factor on bank performance.

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Abstract:This paper reviews the performance of the 4 Dutch system banks during the economic crisis. The banks were followed during the years 2005-2013 and data was collected from their annual statements. During this time the Basel 2 framework was enforced by law in the Netherlands. The paper evaluates the impact of Basel 2 on bank performance. I found that the banks were steadily increasing their Tier 1 and total capital ratios, which are under strict supervision of Basel 2. At the same time the banks have shown strong decreases in their performance markers, ROE and ROA. I have performed a correlation analysis on the ratios and performance markers of the banks and found that the decrease in ROE and ROA was strongly negatively correlated with the Tier 1 and total capital ratios, suggesting a link with the measures taken by the banks due to the Basel 2 legislation. I conclude that indeed Basel 2 did impact performance of the Dutch system banks and suggest revisions to banking supervision which include the introducing of a maximum limit to the Tier 1 and total capital ratios in order to boost ROE and ROA performance.
Item Type:Essay (Bachelor)
Faculty:BMS: Behavioural, Management and Social Sciences
Subject:85 business administration, organizational science
Programme:International Business Administration BSc (50952)
Link to this item:http://purl.utwente.nl/essays/66214
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