Banking Flows and Financial Crisis : Financial Interconnectedness and Basel III Effects

This paper examines the factors that determine banking flows from advanced economies to emerging markets. In addition to the usual determinants of capital flows in terms of global push and local pull factors, it examines the role of bilateral factors, such as growth differentials and economic size, as well as contagion factors and measures of the depth in financial interconnectedness between lenders and borrowers. The analysis finds profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, banking flows in emerging Europe stand out as a more stable region than is the case in other developing regions. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, the authors use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.

Bibliographic Details

Main Authors:	Ghosh, Swati R., Sugawara, Naotaka, Zalduendo, Juan
Language:	English
Published:	2011-08-01
Subjects:	ADVANCED COUNTRIES, ADVANCED ECONOMIES, ADVANCED ECONOMY, AGENCY PROBLEMS, AMOUNT OF CAPITAL, AMOUNT OF LOANS, ASSET PRICES, ASYMMETRIC INFORMATION, BALANCE OF PAYMENTS, BALANCE SHEET, BALANCE SHEETS, BANK LENDING, BANK OF ENGLAND, BANK POLICY, BANKING CRISES, BANKING INSTITUTIONS, BANKING SECTOR, BANKING SECTOR DEVELOPMENTS, BANKING SECTORS, BANKING SUPERVISION, BANKING SYSTEM, BANKING SYSTEMS, BASIS POINT, BASIS POINTS, BOND, BOND FLOWS, BOND MARKETS, BONDS, BORROWER, BORROWING, BUSINESS CYCLE, CAPITAL ACCOUNT, CAPITAL ADEQUACY, CAPITAL ADEQUACY RATIOS, CAPITAL BASE, CAPITAL FLOW, CAPITAL FLOWS, CAPITAL INFLOWS, CAPITAL MARKETS, CAPITAL RATIO, CAPITAL RATIOS, CAPITAL REQUIREMENT, CAPITAL REQUIREMENTS, CAPITAL STANDARDS, CAPITAL STRUCTURE, CAPITALIZATION, COLLATERAL, CORPORATE GOVERNANCE, COST OF CAPITAL, COST OF EQUITY, COUNTRY RISK, CREDIT AVAILABILITY, CREDIT GROWTH, CREDIT MARKET, CREDIT MARKETS, CREDITOR, CRISIS COUNTRIES, CRISIS COUNTRY, CROSS-BORDER FLOWS, CURRENCY, CURRENCY CRISES, CURRENT ACCOUNT BALANCE, CURRENT ACCOUNT DEFICITS, DEBT, DEBT FLOWS, DEBT-EQUITY, DEBT-EQUITY SWAPS, DEBTOR, DECLINE IN INVESTMENT, DERIVATIVES, DEVELOPING COUNTRIES, DIVIDEND, DIVIDEND PAYMENTS, DOMESTIC BANK, DOMESTIC CAPITAL, DUMMY VARIABLE, DUMMY VARIABLES, DURABLE, EMERGING MARKET, EMERGING MARKET ECONOMIES, EMERGING MARKETS, EQUITY CAPITAL, EQUITY INVESTMENT, EQUITY INVESTMENTS, EXCHANGE RATE MOVEMENTS, EXCHANGE RATE REGIME, EXCHANGE RATES, EXPORT GROWTH, EXPOSURE, EXPOSURES, FACTORS OF PRODUCTION, FINANCIAL ASSET, FINANCIAL CRISES, FINANCIAL CRISIS, FINANCIAL DEVELOPMENT, FINANCIAL FLOWS, FINANCIAL INFRASTRUCTURE, FINANCIAL INSTITUTIONS, FINANCIAL INTEGRATION, FINANCIAL MARKETS, FINANCIAL OPENNESS, FINANCIAL STABILITY, FINANCIAL SYSTEM, FINANCIAL TRANSACTIONS, FLEXIBLE EXCHANGE RATE, FLOW OF INFORMATION, FOREIGN CAPITAL, FOREIGN DIRECT INVESTMENT, FOREIGN EXCHANGE, FOREIGN EXCHANGE RESERVE, FOREIGN INTEREST, FOREIGN MARKETS, GLOBAL BANKING, GLOBAL CAPITAL, GLOBAL ECONOMY, GLOBAL FINANCIAL MARKETS, GLOBAL RISKS, GOVERNMENT POLICIES, HOLDING, HOME COUNTRY, HOME MARKET, HOST COUNTRIES, HOST COUNTRY, INCOME, INFLATION, INTEREST DIFFERENTIAL, INTEREST DIFFERENTIALS, INTEREST RATE, INTEREST RATE DIFFERENTIAL, INTEREST RATE DIFFERENTIALS, INTEREST RATES, INTERNATIONAL BANK, INTERNATIONAL BANKING, INTERNATIONAL BANKS, INTERNATIONAL CAPITAL, INTERNATIONAL CAPITAL MARKET, INTERNATIONAL CREDIT, INTERNATIONAL DEVELOPMENT, INTERNATIONAL ECONOMICS, INTERNATIONAL FINANCE, INTERNATIONAL FINANCIAL STATISTICS, INTERNATIONAL PORTFOLIO, INVESTING, INVESTMENT FLOWS, INVESTMENT RATES, ISSUANCES, LENDER, LENDERS, LENDING DECISIONS, LENDING SPREAD, LENDING SPREADS, LIQUIDITY, LIQUIDITY RISK, LOAN, LOAN PORTFOLIOS, LOCAL CURRENCY, LONG-TERM EXTERNAL DEBT, MACROECONOMIC CONDITIONS, MACROECONOMIC POLICIES, MACROECONOMIC VARIABLES, MACROECONOMICS, MARKET INTEREST RATE, MARKET PARTICIPANTS, MARKET VOLATILITY, MIDDLE-INCOME COUNTRIES, MINIMUM CAPITAL REQUIREMENTS, MONETARY AUTHORITIES, MONEY MARKET, NATIONAL SAVINGS, OFF BALANCE SHEET, OPERATING EFFICIENCY, OUTPUT, POLITICAL STABILITY, PORTFOLIO, PORTFOLIO FLOWS, PORTFOLIO INVESTMENT, PORTFOLIO INVESTMENTS, POSITIVE COEFFICIENT, PRIVATE CAPITAL, PRIVATE CAPITAL FLOWS, PRIVATE CAPITAL INFLOWS, PROBABILITY OF DEFAULT, PRODUCTION STRUCTURE, PROFITABILITY, PRUDENTIAL REGULATION, PRUDENTIAL REGULATIONS, PUSH FACTOR, PUSH FACTORS, RATE OF RETURN, REAL EXCHANGE RATE, REGIONAL DUMMIES, REGIONAL DUMMY, REGULATORY CAPITAL, REGULATORY FRAMEWORK, REPAYMENTS, RETAINED EARNINGS, RETURNS, RISK AVERSION, RISK FACTOR, RISK MANAGEMENT, RISKY ASSETS, SAVINGS RATES, SOVEREIGN RISK, SUBSIDIARIES, TIER 1 CAPITAL, TIER 2 CAPITAL, TRADE FLOWS, TRADING, TRANSACTION, TRANSACTION COSTS, TRANSPARENCY, TRANSPORT, TREASURIES, VALUATION,
Online Access:	http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111213102006 https://hdl.handle.net/10986/3684
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