Basel II and bank lending to emerging markets: Evidence from the German banking sector

Thilo Liebig; Daniel Porath; Beatrice Weder; Michael Wedow

doi:10.1016/j.jbankfin.2006.05.017

Journal of Banking & Finance Vol. 31 No. 2 2007

Basel II and bank lending to emerging markets: Evidence from the German banking sector

Thilo Liebig¹; Daniel Porath²; Beatrice Weder^3,4; Michael Wedow¹

¹ Deutsche Bundesbank · ² University of Applied Sciences Mainz · ³ Johannes Gutenberg University Mainz · ⁴ Centre for Economic Policy Research

Abstract

This paper investigates whether the new Basel Accord will induce a change in bank lending to emerging markets using a comprehensive new 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.

DOI: 10.1016/j.jbankfin.2006.05.017
Volume: 31
Issue: 2
Pages: 401-418
Language: en
Sources: openalex crossref bibtex:phds-export.bib

Basel II and bank lending to emerging markets: Evidence from the German banking sector

Abstract

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