Risk-Based Capital Requirements for Banks and International Trade

Banu Demir (), Evren Örs, and Tomasz Michalski

No 11565, CEPR Discussion Papers from C.E.P.R. Discussion Papers

Abstract: We find that changes in banks’ risk-based capital requirements can affect firm-level exports. We exploit the mandatory Basel II adoption in its Standardized Approach by all banks in Turkey on July 1, 2012. This change affects risk-weights for letters of credit and generates two identification schemes with opposite predicted signs. Using data that cover 16,662 exporters shipping 2,888 different products to 158 countries, we find that the share of letter of credit-based exports decreases (increases) at the firm- country-product level when the associated counterparty risk-weights increase (decrease) after Basel II adoption. However, growth of firm-product-country level exports remains unaffected.

Keywords: International trade finance; Basel ii; Letters of credit (search for similar items in EconPapers)
JEL-codes: F14 G21 G28 (search for similar items in EconPapers)
Date: 2016-10
New Economics Papers: this item is included in nep-ban, nep-cba, nep-int and nep-rmg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

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Related works:
Journal Article: Risk-Based Capital Requirements for Banks and International Trade (2017)
Working Paper: Risk-Based Capital Requirements for Banks and International Trade (2014)
Working Paper: Risk-Based Capital Requirements for Banks and International Trade (2014)
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