 Should National Development Banks be Subject to Basel III?Ricardo Gottschalk, Lavinia B. Castro and Jiajun Xu Review of Political Economy, 2022, vol. 34, issue 2, 249-267 Abstract: We address the question: What are the potential impacts of Basel III capital framework for National Development Banks (NDBs) upon their ability to fulfil their developmental mandate? We compare three large NDBs’ experiences with Basel III implementation: Brazilian Development Bank, China Development Bank and Germany’s KfW. We find that the biggest constraint from Basel III comes less from its levels of comprehensiveness and complexity and more from tightening the levels of capital requirements and demanding better capital quality. The disincentive to the use of internal models and changes in the method for the calculation of operational risks may result in a substantial increase in required capital. Meanwhile, the new large exposure rule may dilute the banks’ focus on large, infrastructure projects; the high-risk weights for exposures to project finance and equity may hinder NDBs from using these financing modalities extensively to support large and complex projects and activities that involve innovation financing. Date: 2022 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:revpoe:v:34:y:2022:i:2:p:249-267 Ordering information: This journal article can be ordered from DOI: 10.1080/09538259.2021.1977541 Access Statistics for this article Review of Political Economy is currently edited by Steve Pressman and Louis-Philippe Rochon More articles in Review of Political Economy from Taylor & Francis Journals |
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