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Basel II and Bank Lending to Emerging Markets: Micro Evidence from German Banks

Author

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  • Liebig, Thilo
  • Weder di Mauro, Beatrice
  • Porath, Daniel
  • Wedow, Michael

Abstract

This paper investigates whether the new Basel Accord will induce a change in bank lending to emerging markets using a new loan level data set on German banks' foreign exposure. We test two interlinked hypotheses on the conditions under which the change in the regulatory capital would leave lending flows unaffected. This would be the case if (i) the new regulatory capital requirement remains below the economic capital, and (ii) banks' economic capital to emerging markets already adequately reflects risk. On both accounts the evidence indicates that the new Basel Accord should have a limited effect on lending to emerging markets.

Suggested Citation

  • Liebig, Thilo & Weder di Mauro, Beatrice & Porath, Daniel & Wedow, Michael, 2005. "Basel II and Bank Lending to Emerging Markets: Micro Evidence from German Banks," CEPR Discussion Papers 5163, C.E.P.R. Discussion Papers.
    • Handle: RePEc:cpr:ceprdp:5163
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    References listed on IDEAS

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    More about this item

    Keywords

    Basel accord; Banking regulation; International lending;
    All these keywords.

    JEL classification:

    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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