Conclusion

A K M Kamrul Hasan () and Yasushi Suzuki
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A K M Kamrul Hasan: Ritsumeikan Asia Pacific University

Chapter Chapter 9 in Implementation of Basel Accords in Bangladesh, 2021, pp 187-195 from Springer

Abstract: Abstract Scholars argued that financial stability is required for long-term economic growth (Lin and Huang, Journal of Macroeconomics 34:1007–1019, 2012; Moshirian and Wu, Research in International Business and Finance 26:428–442, 2012). BB formally implemented the Basel Accord II in 2009 to bring financial stability to the country’s financial system (BB, 2014). Hence, the study investigates the banking sector performance between the period 2009 and 2018 to examine to what extent the Basel framework was able to bring financial stability to Bangladesh. We observed during our investigated period that, the banking industry was more volatile, non-performing loans soared rapidly, the country had experienced a bank run situation and tax payers’ money was wasted to recapitalize the inefficient state-owned banks. In addition, about BDT 225 billion in banking money was lost due to major bank scams, irregularities and heists within this period (CPD, 2018). The study found evidence that several imprudent initiatives had been taken by local regulators while implementing the Basel regulation. For example, enhancing ‘competition’ among ECAIs without creating appropriate ‘incentive’ in the institutions, consenting to the issuance of bulk amounts of sub-debts without considering its ill-impact, and repeatedly reviewing the loan rescheduling policy and relaxing the bad loans written-off policy. Those initiatives have created a moral hazard in the industry. In a word, country’s microprudential banking regulations have failed to bring financial stability and financial discipline to the market which created a ‘banking lost decade’ for the banking and financial system of Bangladesh. This chapter summarizes the central theme of this academic work why microprudential banking regulations, specifically, the Basel Accords II and III implementation failed to bring financial stability to the Bangladeshi banking sector. The structure of the chapter is as follows. Section 9.2 describes the overall summary of the research findings which decipher the anomalies we raised in Chapter 1. Section 9.3 presents future research issues and concluding remarks.

Date: 2021
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DOI: 10.1007/978-981-16-3472-7_9

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