The Role of International Basel Committee in Establishing Regulatory Rules for Algerian Banks

Abstract

This study aims to discuss banking regulatory rules set by the international Basel committee after the considerable damages that were caused by many crises which affected financial and banking systems in advanced economies. It represents an attempt to analyze the extent to which Algerian banking prudential systems comply with these rules.

Following a detailed analysis of the theoretical underpinnings of Basel committee regulations, the study seeks to analyze their influence on prudential regulations set by the Bank of Algeria as control and supervisory authority over the banking system. The study findings prove that banking regulations are in line with Basel committee standards and capital adequacy ratios are fairly above the required minimum level % 8.

However, the major problem facing Algerian banking is not so much in setting rules and improving regulations, it rather lies in the sustainable commitment to abide by them, and the respect of the disclosure and transparency standards within the context of market discipline.

Finally, this study suggests having more independence for the central bank in Algeria from government interventions and full transparency and disclosure about the conduct of banking operations.