Financial Awareness - Risk, Stability & Emerging Finance
Which Basel Accord introduced the leverage ratio as a non-risk based measure to restrict excessive borrowing by banks?
Which Basel Accord introduced the leverage ratio as a non-risk based measure to restrict excessive borrowing by banks?
medium Q14 of 15
Step-by-Step Solution
Step 1: Understand Basel III innovations
Basel III introduced new measures to strengthen bank resilience after the 2008 financial crisis.Step 2: Identify leverage ratio introduction
The leverage ratio, a non-risk based capital measure to limit excessive borrowing, was introduced under Basel III to complement risk-based capital requirements.Final Answer:
Basel III → Option AQuick Check:
Leverage ratio introduced = Basel III ✅
Quick Trick: Leverage ratio = Basel III to control borrowing.
Common Mistakes:
- Confusing leverage ratio with Basel I or II which did not have it.
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