Basel II implementation in developing countries and effects on SME development.

Gottschalk, Ricardo (2007) Basel II implementation in developing countries and effects on SME development. In: ICRIER- InWent Conference on ‘Financial globalisation and domestic financial sector development in South and Central Asia'., 22-23 November 2007, New Delhi, India. (Unpublished)

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Abstract

This Issue Paper examines the implementation of Basel II in low-income countries (LICs). The aims are to assess the low-income countries’ views and concerns on Basel II, whether and how they intend to implement the new Basel Capital Accord, and the challenges they may face in doing so. The paper discusses in particular the possible implications of Basel II implementation for competitiveness of LIC banking sectors and financial inclusion. Drawing on a survey covering low-income countries especially from Africa, the paper finds that in addition to technical challenges that include the need to build long and reliable data base to run sophisticated risk assessment models, and to build supervisors’ capacity to assess, validate and monitor the use of such models, LICs face broader issues related to Basel II implementation, such as competitiveness of national and foreign banks, access to credit by SMEs, potential increased pro-cyclicality of bank lending and their macroeconomic impacts. The paper concludes that LIC regulators may not need just technical assistance but also more ‘political’ support for their negotiations on regulations with international banks to ensure that their regulatory regimes are consistent with national aims for both financial stability and sufficient credit, especially to SMEs.

Item Type:Conference or Workshop Item (Paper)
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Published in the proceedings.

Research Areas:Business > Economics
ID Code:5586
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Deposited On:10 May 2010 06:36
Last Modified:06 Feb 2013 10:57

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