The regulation of multilateral development banks: is it needed? A preliminary analysis

Laura Gianfagna, Irene Crimaldi and Davide Gallan

Journal of Financial Regulation and Compliance, 2021, vol. 29, issue 4, 434-453

Abstract: Purpose - A difference is noted by comparing the net loans to the non-financial sector in the two sets of institutions. The post-global financial crisis (GFC), literature agrees on a reduced lending pace by financial institutions (FIs) as a result of stricter capital regulations. At the same time, an increasing volume of outstanding loans, directed even to advanced countries, characterize the balance sheet of several multilateral development banks (MDBs). Design/methodology/approach - This paper observes how a different degree of banking regulation might have shaped the economic response to the GFC by FIs and MDBs. Findings - The authors indicate that MDBs’ financing, with a coherent objective of countercyclical support to the economies hit by the GFC, seems to have filled a market gap caused by the FIs’ pro-cyclical lending reduction. Originality/value - While a controversial issue is whether Basel standards should be imposed on MDBs, a harmonization amongst MDBs of their transparency and reporting standards might be beneficial: some preliminary consideration has been portrayed.

Keywords: Multilateral development banks (MDBs); Preferred creditor status (PCS); Exposure exchange agreement (EEA); International banking regulation; Global financial crisis (GFC); F53; G28; O19 (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jfrcpp:jfrc-10-2020-0103

DOI: 10.1108/JFRC-10-2020-0103

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