Basel II and its Implications for Foreign Banks Financing Emerging Countries

Jean-Marc Figuet and Delphine Lahet

Revue d’économie du développement, 2007, vol. 15, issue 5, 47-67

Abstract: International bank credit is a major way for emerging countries to finance development and growth. The aim of this article is to study the impact of the Basel capital requirements in developed countries on the nature of the bank foreign claims towards emerging debtors. We find evidence that Basel I makes developed countries reduce the credit supply but to increase short term claims in foreign currencies. The Asian crisis is the proof that the latter are a very destabilising source of funds. Then, we argue, with a simulation of the IRB models, that the foreign bank borrowing conditions for emerging debtors will not be improved by Basel II. JEL Classification: F33 ; F34 ; G28

Keywords: prudential regulation; IRB; emerging countries; bank financing; short term; push and pull factors (search for similar items in EconPapers)
JEL-codes: G28 (search for similar items in EconPapers)
Date: 2007
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