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Basel II and its Implications for Foreign Banks Financing Emerging Countries

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  • Jean-Marc Figuet
  • Delphine Lahet

Abstract

International bank credit is a major way for emerging countries to finance development and growth. The aim of this article is to study the impact of the Basel capital requirements in developed countries on the nature of the bank foreign claims towards emerging debtors. We find evidence that Basel I makes developed countries reduce the credit supply but to increase short term claims in foreign currencies. The Asian crisis is the proof that the latter are a very destabilising source of funds. Then, we argue, with a simulation of the IRB models, that the foreign bank borrowing conditions for emerging debtors will not be improved by Basel II. JEL Classification: F33 ; F34 ; G28

Suggested Citation

  • Jean-Marc Figuet & Delphine Lahet, 2007. "Basel II and its Implications for Foreign Banks Financing Emerging Countries," Revue d’économie du développement, De Boeck Université, vol. 15(5), pages 47-67.
    • Handle: RePEc:cai:edddbu:edd_215_0047
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    Cited by:

    1. Figuet, Jean-Marc & Humblot, Thomas & Lahet, Delphine, 2015. "Cross-border banking claims on emerging countries: The Basel III Banking Reforms in a push and pull framework," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 34(C), pages 294-310.

    More about this item

    Keywords

    prudential regulation; IRB; emerging countries; bank financing; short term; push and pull factors;
    All these keywords.

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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