Implications of Basel II for financial stability. Clouds are darker for developing countries

Authors

  • Mario Tonveronachi

DOI:

https://doi.org/10.13133/2037-3643/9879

Keywords:

Developing Countries, Policy, Regulation

Abstract

Placing Basel II in the perspective of the more general trend in financial regulation, the paper analyses its efficacy and efficiency as a device to foster financial resiliency. In assessing the criticisms levelled against the New Accord, special attention is devoted to the case of the emerging countries. I suggest that Basel II is neither a sufficient, nor a necessary condition to attain systemic financial stability, especially in weak institutional and macro-policy environments. Taking also into account just how complex and onerous the scheme is, I conclude that the emerging countries should look for new international institutional arrangements based on the principle of astability level playing field.

  

JEL Codes: G21, G28, O16, P34

References

BBVA (2003), "A practical proposal for improving diversification treatment in Basel 2", Metodologias de riesgo corporativo, diciembre, pp. 1-37.

BCBS - BASEL COMMITTEE ON BANKING SUPERVISION (2006), Core Principles for Effective Banking Supervision, Basel.

BERNANKE B. (2004), "The implementation of Basel II: some issues for cross-border banking", Federal Reserve Bank.

BORIO C. (2003), "Towards a macroprudential framework for financial supervision and regulation?", BIS Papers, no. 128.

CARUANA J. (2004), "Basel II. A new approach to banking supervision", BIS Review, vol. 33, pp. 1-9.

CORNFORD A. (2005). "Basel Il: the revised framework of June 2004", UNCTAD, Discussion paper, no. 178.

DELOITTE (2005), "Banking on Basel. Guidelines for a successful, modem approach to bank management based on pillars 2 and 3".

DHUMALE R. (2000), "Capital adequacy standards: are they sufficient?", ERSC Centre for Business Research, Working Paper, no. 165.

DHUMALE R. (2001), "Incentive v. rule-based financial regulation: a role for market discipline", in E. Ferran and C.A.E. Goodhart eds, pp. 59-73.

EATWELL J. (2001), "New issues in international financial regulation ", in E. Ferran and C.A.E. Goodhart eds, pp. 235-54.

EATWELL J. and L. TAYLOR (1998), International Capital Markets and the Future of Economic Policy, Center for Economic Policy Analysis, New York.

ECB - EUROPEAN CENTRAL BANK (2005), "The new Basel Capital Accord: main features and implications", Monthly Bulletin, January.

FERGUSON R. (2003), "Concerns and considerations for the practical implementation of the New Basel Accord", ICBI Risk Management 2003 Conference, Geneva, Switzerland December 2.

FERRAN E. and C.A.E. GOODHART eds (2001), Regulating Financial Services and Markets in the Twenty First Century, Hart Publishing, Oxford.

GOODHART C.A.E. (2004), Some New Directions for Financial Stability?, Per Jacobsson Lecture.

GOODHART c., HOFMANN B. and M. SEGOVIANO (2004), "Bank regulation and macroeconomic fluctuations", Oxford Review of Economic Policy, vol. 20, no. 4, pp. 591-615.

GORDY M. and B. HOWELLS (2006), "Procyclicality in Basel II: can we treat the disease without killing the patient?", Journal of Financial Intermediation, vol. 15, no. 3, pp. 395-417.

GRIFFITH-JONES S. and A. PERSAUD (2003), "The political economy of Basle II and implications for emerging economies", paper presented at the Seminar on "Management of Volatility, Financial Liberalization and Growth in Emerging Economies", ECLAC, Santiago de Chile, April 24-25.

GRIFFITH-JONES S. and S. SPRATT (2001), Will the Proposed New Basel Capital Accord Have a Negative Effect on Developing Countries?, Institute of Development Studies, Sussex.

GRIFFITH-JONES S., M.A. SEGOVIANO and S. SPRATT (2004), "Basel II: developing countries and portfolio diversification", CEPAL Review, vol. 83, August, pp. 145-60.

HALDANE A. (2001), "The Financial Stability Forum (FSF): just another acronym?", in E. Ferran and C.A.E. Goodhart eds, pp. 255-71.

IMF - INTERNATIONAL MONETARY FUND (2001), Macroprudential Analysis: Selected Aspects, June, pp. 1-61. .

JETIN B. (2007), "The Basel II Accord and the development of market-based finance in Asia", paper presented at the Meeting organised by iBase on "Financial liberalization and Global Governance", Rio de Janeiro, 19 March.

KAUFMAN G. (2005), "Basel II vs. corrective action: which is best for public policy?", Journal of Financial Markets, Institutions a Instruments, vol. 14, no. 5, pp. 349-67.

KREGEL J. (1997), "Margins of safety and weight of the argument in generating financial fragility", Journal of Economic Issues, vol. XXXI, no. 2, pp. 543-48.

KREGEL J. (1998), "Capital flows, global banking and financial crises in the postBretton Woods era as a guide to the 21st century's financial crises", paper prepared for the Seminar on "Evaluacion y Perspectivas de la Economia Mundial: La Crisi del Sureste Asiatico", organised by the Instituto de Investigaciones Economicas y la Facultad de Economia, UNAM, Mexico City, 8-9 June.

KREGEL J. (1998), "Yes , 'It' did happen again – A Minsky crisis happened in Asia", The Jerome Levy Economics Institute, Working Paper, no. 234.

KREGEL J. (2006), "Can the Basel revised framework succeed where Basel I failed?", paper presented at the International Seminar on "Global Finance and Strategies of Developing Countries", organised by the Institute of Economics, University of Campinas, Brazil, March 13-14.

LIEBIG T., D. PORATH, B. WEDER and M. WEDOW (2006), "Basel II and bank lending to emerging markets:" evidence from the German banking sector", Journal of Banking a Finance, vol. 31, no. 2, pp. 401-18.

MINSKY, H. (1986), Stabilizing an Unstable Economy, Yale University Press, New Haven.

MONTANARO E. and M. TONVERONACHI (2006), "I processi di concentrazione nella gestione delle crisi bancarie. Il caso italiano, 1992-2004", Banca Impresa Società, vol. Xxv, n. 3, pp. 315-39.

ROFAS-SUAREZ L. (2001), "Can international capital standard strengthen banks in emerging markets?", Institute for International Economics, Working Paper, no. 01-10.

ROFAS-SUAREZ L. and S. WIESBROD (1996), "Towards an effective regulatory and supervisory framework far Latin America", paper presented to the Inter-American Development Bank Conference on "Safe and Sound Financial Systems: What Works for Latin America?", Washington, 27 and 28 September.

SONG I. (2004), "Foreign bank supervision and challenges to emerging market supervisors", International Monetary Fund, Working Paper, no. 04/82.

TONVERONACHI M. (2006), "The role of foreign banks in emerging countries. The case of Argentina, 1993-2000", Investigacion Economica, vol. 65, n. 255, pp. 15-60.

TONVERONACHI M. (2006), "Foreign debt and financial fragility in the perspective of the emerging countries", BNL Quarterly Review, vol. LIX, no. 236, pp. 23-48.

UNCTAD (2006), "Basel 2: The new Basel Capital Accord and its impact on commodity financing in developing countries", UNCTAD/DITC/COM/2006/8.

WARD J. (2002), "The new Basel Accord and development countries: problems and alternatives", ESRC Centre for Business Research, Working Paper, no. 04.

Downloads

Published

2012-04-19

How to Cite

Tonveronachi, M. (2012). Implications of Basel II for financial stability. Clouds are darker for developing countries. PSL Quarterly Review, 60(241). https://doi.org/10.13133/2037-3643/9879

Issue

Section

Articles