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The regulation of multilateral development banks: is it needed? A preliminary analysis

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  • Laura Gianfagna
  • Irene Crimaldi
  • Davide Gallan

Abstract

Purpose - A difference is noted by comparing the net loans to the non-financial sector in the two sets of institutions. The post-global financial crisis (GFC), literature agrees on a reduced lending pace by financial institutions (FIs) as a result of stricter capital regulations. At the same time, an increasing volume of outstanding loans, directed even to advanced countries, characterize the balance sheet of several multilateral development banks (MDBs). Design/methodology/approach - This paper observes how a different degree of banking regulation might have shaped the economic response to the GFC by FIs and MDBs. Findings - The authors indicate that MDBs’ financing, with a coherent objective of countercyclical support to the economies hit by the GFC, seems to have filled a market gap caused by the FIs’ pro-cyclical lending reduction. Originality/value - While a controversial issue is whether Basel standards should be imposed on MDBs, a harmonization amongst MDBs of their transparency and reporting standards might be beneficial: some preliminary consideration has been portrayed.

Suggested Citation

  • Laura Gianfagna & Irene Crimaldi & Davide Gallan, 2021. "The regulation of multilateral development banks: is it needed? A preliminary analysis," Journal of Financial Regulation and Compliance, Emerald Group Publishing Limited, vol. 29(4), pages 434-453, July.
    • Handle: RePEc:eme:jfrcpp:jfrc-10-2020-0103
    DOI: 10.1108/JFRC-10-2020-0103
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    More about this item

    Keywords

    Multilateral development banks (MDBs); Preferred creditor status (PCS); Exposure exchange agreement (EEA); International banking regulation; Global financial crisis (GFC); F53; G28; O19;
    All these keywords.

    JEL classification:

    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O19 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - International Linkages to Development; Role of International Organizations

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