Arbeitspapier
The effects of ratings-contingent regulation on international bank lending behavior: Evidence from the Basel 2 accord
We investigate the effects of credit ratings-contingent financial regulation on foreign bank lending behavior. We examine the sensitivity of international bank flows to debtor countries' sovereign credit rating changes before and after the implementation of the Basel 2 risk-based capital regulatory rules. We study the quarterly bilateral flows from G-10 creditor banking systems to 77 recipient countries over the period Q4:1999 to Q2:2013. We find direct evidence that sovereign credit re-ratings that lead to changes in risk-weights for capital adequacy requirements have become more significant since the implementation of Basel 2 rules for assessing banks' credit risk under the standardized approach. This evidence is consistent with global banks acting via their international lending decisions to minimize required capital charges associated with the use of ratings-contingent regulation. We find evidence that banking regulation induced foreign lending has also heightened the perceived sovereign risk levels of recipient countries, especially those with investment grade status.
- ISBN
-
978-952-323-002-6
- Sprache
-
Englisch
- Erschienen in
-
Series: Bank of Finland Research Discussion Papers ; No. 25/2014
- Klassifikation
-
Wirtschaft
Financial Markets and the Macroeconomy
International Lending and Debt Problems
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
National Debt; Debt Management; Sovereign Debt
- Thema
-
cross-border banking
sovereign credit ratings
Basel 2
rating-contingent financial regulation
- Ereignis
-
Geistige Schöpfung
- (wer)
-
Hasan, Iftekhar
Kim, Suk-Joong
Wu, Eliza
- Ereignis
-
Veröffentlichung
- (wer)
-
Bank of Finland
- (wo)
-
Helsinki
- (wann)
-
2014
- Handle
- Letzte Aktualisierung
-
10.03.2025, 11:41 MEZ
Datenpartner
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. Bei Fragen zum Objekt wenden Sie sich bitte an den Datenpartner.
Objekttyp
- Arbeitspapier
Beteiligte
- Hasan, Iftekhar
- Kim, Suk-Joong
- Wu, Eliza
- Bank of Finland
Entstanden
- 2014
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