THE EFFECTS OF BASEL III ON THE SMALLER BANKS IN SWEDEN

Abstract

Background: After the recent financial crisis, new regulations considering the banks’ capital coverage, liquidity, leverage and risk management was presented in a regulatory framework called Basel III. Purpose: The purpose of the research is to see how the smaller banks in Sweden have been affected by the Basel III regulations. Method: The study applies a qualitative method with a deductive approach. The empirical data was acquired through interviews with employees at the banks. Conclusion: The Basel III regulations have required the banks to allocate a relatively large amount of resources to understanding the new regulations and ensuring that they are followed. What has mainly affected the banks have not been the capital reserve requirements or the new liquidity rules, but instead following the financial reporting forms and comprehending the new regulations have been the largest challenges for the smaller banks.