BANKING FLOWS AND FINANCIAL CRISIS FINANCIAL INTERCONNECTEDNESS AND BASEL III EFFECTS

Swati R. Ghosh (), Naotaka Sugawara and Juan Zalduendo ()
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Swati R. Ghosh: The World Bank, 1818 H Street NW, Washington DC 20433, USA
Naotaka Sugawara: The World Bank, 1818 H Street NW, Washington DC 20433, USA
Juan Zalduendo: The World Bank, 1818 H Street NW, Washington DC 20433, USA

Journal of International Commerce, Economics and Policy (JICEP), 2012, vol. 03, issue 01, 1-32

Abstract: This paper examines the factors that determine banking flows from advanced economies to emerging markets. In addition to the usual determinants of capital flows in terms of global push and local pull factors, we examine the role of bilateral factors, such as growth differentials and economic size, as well as contagion factors and measures of the depth in financial interconnectedness between lenders and borrowers. We find profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, emerging Europe stands out as a more stable region. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, we use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.

Keywords: Basel III; capital flows; cross-border banking flows; financial crises; financial linkages; emerging markets; F30; F34; G01; G15; G21 (search for similar items in EconPapers)
Date: 2012
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DOI: 10.1142/S1793993312400017

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