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Aligning International Banking Regulation with the SDGs

Author

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  • Liliana Rojas-Suarez

    (Center for Global Development)

Abstract

Basel III—the international standard for banking regulation—has strengthened global financial stability but has also led to unintended consequences that may hinder progress toward key Sustainable Development Goals (SDGs). This paper examines how Basel III’s regulatory framework may restrict bank lending to SMEs (impacting SDG 10) and constrain infrastructure finance (impacting SDG 8). Addressing these challenges requires refining risk assessment methodologies while preserving Basel III’s core objective: accurate risk evaluation. For SMEs, tailoring risk weights using local credit registry data can better reflect economic conditions in emerging markets. For infrastructure, recognizing it as a distinct asset class and leveraging credit risk mitigation tools could improve financing. Greater engagement from multilateral institutions, particularly the World Bank, is essential to advancing these solutions while maintaining financial stability.

Suggested Citation

  • Liliana Rojas-Suarez, 2025. "Aligning International Banking Regulation with the SDGs," Policy Papers 351, Center for Global Development.
    • Handle: RePEc:cgd:ppaper:351
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    More about this item

    Keywords

    Basel III; Sustainable Development Goals; Infrastructure Finance; SME Lending;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

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