Basel II and Banking in Emerging and Other Developing Economies

Andrew Cornford
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Andrew Cornford: Cambridge University

Chapter 9 in Managing Economies, Trade and International Business, 2010, pp 147-164 from Palgrave Macmillan

Abstract: Abstract In the words of two former senior British financial regulators the objective of the new arrangements (Basel II) is to strengthen the soundness and stability of the international banking system while maintaining sufficient consistency so that capital regulation will not be a significant source of competitive inequality among internationally active banks’.1 Basel II sets levels of minimum regulatory capital for three categories of banking risk — credit, market and operational — according to rules which include a multiplicity of different approaches. This multiplicity reflects the objective of the Basel Committee on Banking Supervision (BCBS) to accommodate within these rules banks of very different levels of sophistication as well as points raised by critics during the long process of drafting Basel II. The effects of the rules of Basel II on different dimensions of banking risk have been extensively debated during the long drafting process and during the current financial crisis. However, this debate was primarily concerned with regulation and risk management in general and devoted only limited attention to the likely impact of the introduction of Basel II in emerging and other developing economies.

Keywords: Credit Risk; Capital Adequacy; Banking Risk; Basel Committee; Credit Rating Agency (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-0-230-27401-3_9

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DOI: 10.1057/9780230274013_9

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