Pillar III enhances market discipline by requiring credit institutions to disclose appropriate risk information, allowing the market to reward well-managed and well-capitalized credit institutions. 4  BIS Review 42/2005  Let me now turn to some implications of Basel II for the stability of the banking sector.
(Although, as I noted earlier, stock prices have risen quite a bit since 2002, their gains have been far outstripped by the boom in earnings.) Lower valuations for firms in industries that are in the throes of downsizing also provide opportunities for LBOs.