PERSPECTIVES ON GLOBALIZATION AND DEVELOPMENT; Guest Editor: KENNETH A. REINERT (George Mason University, USA)No Access

BANKING FLOWS AND FINANCIAL CRISIS FINANCIAL INTERCONNECTEDNESS AND BASEL III EFFECTS

The World Bank, 1818 H Street NW, Washington DC 20433, USA

Corresponding authors. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organisations, or those of the Executive Directors of the World Bank or the governments they represent.

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Naotaka Sugawara

The World Bank, 1818 H Street NW, Washington DC 20433, USA

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, and

Juan Zalduendo

The World Bank, 1818 H Street NW, Washington DC 20433, USA

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https://doi.org/10.1142/S1793993312400017Cited by:2 (Source: Crossref)

Abstract

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, we examine 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. We find profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, emerging Europe stands out as a more stable region. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, we use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.

Keywords:

JEL: F30, F34, G01, G15, G21

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