Ciarán Lynch (Cork South Central, Labour) | Oireachtas source

In his research paper, Professor Kane stressed how the amount of equity capital recorded on a bank's balance sheet is not necessarily a good indicator of its health. Professor Kane indicates this in his most recent comment. In a recent paper of his, he states that the idea that capital requirements can serve as a stabilisation tool is based on the presumption that, other things being equal, the strength of an institution's hold on economic solvency can be adequately approximated to the size of a capital position and that this way of crunching the numbers, as shown on a firm's balance sheet, seems simple and reliable, but it is neither. Can Professor Kane expand on this? Is he saying the balance sheet of a bank is not a great indicator of its health?