Definition
- Bank regulation
- Bank regulation is the set of rules intended to keep banks solvent by stopping them from taking excessive risk.
- Not to be confused with: Bank capital
- Bank capital is a bank's net worth, equal to the value of its assets minus the value of its liabilities.
Test yourself
What is the difference between bank regulation and bank capital?
Regulation is the rules; capital is the cushion of net worth that some of those rules require.