| Title | The political economy of Basle II: The costs for poor countries |
|---|---|
| Published in | The World Economy, Vol. 31, No. 3, p.313-344. ISSN 03785920. |
| Author | Claessens, S.; Underhill, G.R.D.; Zhang, X. |
| Date | 2008 |
| Type | article |
| Abstract | The financial crises of the 1990s triggered many changes to the design of the international financial system. We use the formulation of the new Basle capital accord for banks (B-II) to illustrate that, while much affected, developing countries have had very little influence on this so-called new international financial architecture. We argue that B-II has been formulated largely to serve the interests of powerful market players, with developing countries being left out. At the same time, we demonstrate that B-II is likely to raise the costs and reduce the supply of external financing for developing countries in particular. Furthermore, and importantly, B-II may well increase the pro-cyclicality of external financing, an unfortunate outcome given that developing countries already face much volatility in terms of capital flows. Overall, while B-II may indeed compensate for a range of weaknesses of Basle I, the exclusionary policy process and costs which B-II imposes on developing countries require a re-think of the way in which crucial elements of financial governance, such as the Basle capital accords, are developed and implemented. |
| Publication | http://dare.uva.nl/record/301029 |
| OpenURL | Search this publication in (your) library |
| Persistent Identifier | urn:nbn:nl:ui:29-301029 |
| Metadata | XML |
| Repository | University of Amsterdam |
Go to page top
Go back to contents
Go back to site navigation