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International banking standards in emerging markets: testing the adaptation thesis in the European Union

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Abstract

This paper compares the bank regulatory regimes in the enlarged European Union in order to test the thesis claiming that international banking standards need to be adapted to emerging market circumstances. On the basis of World Bank surveys, we compile structural indices for the 10 post-communist EU members (emerging markets) as well as 17 advanced EU economies and compare them using Bayesian statistical procedures. Our findings show that there were systematic and significant differences, two-thirds of which can be explained by 8 of the 52 structural characteristics. The new member states regulatory regimes are more rule-based and leave less discretion for authorities, which is consistent with the thesis that the emerging market regulatory regimes — including those within the EU — needed to compensate for limited regulatory resources and higher political and economic volatility. Hence, the new generation of international banking standards should recognize these limitations.

Suggested Citation

  • Zdenìk Kudrna & Juraj Medzihorsky, 2012. "International banking standards in emerging markets: testing the adaptation thesis in the European Union," Working Papers IES 2012/06, Charles University Prague, Faculty of Social Sciences, Institute of Economic Studies, revised Mar 2012.
    • Handle: RePEc:fau:wpaper:wp2012_06
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    File URL: http://ies.fsv.cuni.cz/default/file/download/id/19722
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    6. Erik Berglof & Patrick Bolton, 2002. "The Great Divide and Beyond: Financial Architecture in Transition," Journal of Economic Perspectives, American Economic Association, vol. 16(1), pages 77-100, Winter.
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    8. Ha-Joon Chang, 2006. "Understanding the Relationship between Institutions and Economic Development: Some Key Theoretical Issues," WIDER Working Paper Series DP2006-05, World Institute for Development Economic Research (UNU-WIDER).
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    Cited by:

    1. Zdenek Kudrna & Sonja Puntscher Riekmann, 2018. "Harmonizing national options and discretions in the EU banking regulation," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 21(2), pages 144-158, April.

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    More about this item

    Keywords

    banking; emerging markets; European Union; international standards; regulation;
    All these keywords.

    JEL classification:

    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • K23 - Law and Economics - - Regulation and Business Law - - - Regulated Industries and Administrative Law
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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