Capital Adequacy Requirements in Emerging Markets

Barrell, Ray; Gottschalk, Sylvia

doi:10.1057/9780230276093_6

Cited by 2 publications

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“…Using data from Brazil and India, they report that the adoption of Basel I in Brazil and India in the mid-1990s contributed to a banking concentration and a decrease in the total banks' credit to GDP up until the early 2000s, while particularly in India it was creating a credit expansion slowdown. Barrell and Gottschalk (2010) examine the macroeconomic impact of changes in the regulatory capital regime in Mexico and Brazil. They find that the rise in the capital requirement has an adverse effect on Brazilian and Mexican GDPs.…”

Section: The Impact Of Basel II Regulation On the Banking Industrymentioning

confidence: 99%

The implication of banking regulation on bank business model: evidence from the ASEAN countries

Sudrajad

2021

JFRC

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Purpose The purpose of this paper is to examine to what extent is the impact of Basel II adoption on bank business models in the emerging market of selected ASEAN member states. Design/methodology/approach To evaluate the impact of the Basel II regulation on banking business models, a difference-in-differences estimation approach is used. This study defines bank business models using diversification index of a modified Herfindahl–Hirschman Index. Findings The findings suggest that the Basel II framework only affects banks’ income diversification, while there is no evidence that it leads to funding and asset diversification. Under the Basel II accord, banks have adjusted their business models by diversifying their sources of income to avoid the obligation for keeping more capital; in contrast, a less developed financial market structure and a dependency on customer deposits are creating difficulties for banks in diversifying their funding and asset structure. Research limitations/implications The banking sample are taken only from ASEAN countries. Practical implications The findings provide important implication on the regulatory perspective, which is the implementation of Basel II framework induces higher intensity for the use of non-interest income activities. Including in these activities are trading and derivatives. Accordingly, the financial authorities should take with care the use of trading and derivatives products in the banking industry which is already embedded in current Basel framework, the Basel III Accord. Originality/value The paper provides direct evidence on the impact of Basel II on bank business models in the emerging markets of ASEAN banking sectors.

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Section: The Impact Of Basel II Regulation On the Banking Industrymentioning

confidence: 99%

The implication of banking regulation on bank business model: evidence from the ASEAN countries

Sudrajad

2021

JFRC

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“…5 See Barrell and Gottschalk (2006) for a macroeconometric block which also contains some …nancial variables. 6 Notice that alternatively, the e¤ect from the …nancial sector as represented by the …nancial block to the core model could have been through credit volumes or lending stardards.…”

Section: Introductionmentioning

confidence: 99%

In the Quest of Macroprudential Policy Tools

Samano¹

2011

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The global financial crisis of late 2008 could not have provided more convincing evidence that price stability is not a sufficient condition for financial stability. In order to attain both, central banks must develop macroprudential instruments in order to prevent the occurrence of systemic risk episodes. For this reason testing the effectiveness of different macroprudential tools and their interaction with monetary policy is crucial. In this paper we explore whether two policy instruments, namely, a capital adequacy ratio rule in combination with a Taylor rule may provide a better macroeconomic outcome than a Taylor rule alone. We conduct our analysis by appending a macroeconometric financial block to an otherwise standard semistructural small open economy neokeynesian model for policy analysis estimated for the Mexican economy. Our results show that with the inclusion of the second instrument, the central bank may obtain substantial gains. Specifically, the central authority can isolate financial shocks and dampen their effects over macroeconomic variables.

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Capital Adequacy Requirements in Emerging Markets

Cited by 2 publications

References 0 publications

The implication of banking regulation on bank business model: evidence from the ASEAN countries

The implication of banking regulation on bank business model: evidence from the ASEAN countries

In the Quest of Macroprudential Policy Tools

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