IDEAS home Printed from https://ideas.repec.org/a/taf/revpoe/v34y2022i2p249-267.html
   My bibliography  Save this article

Should National Development Banks be Subject to Basel III?

Author

Listed:
  • Ricardo Gottschalk
  • Lavinia B. Castro
  • Jiajun Xu

Abstract

We address the question: What are the potential impacts of Basel III capital framework for National Development Banks (NDBs) upon their ability to fulfil their developmental mandate? We compare three large NDBs’ experiences with Basel III implementation: Brazilian Development Bank, China Development Bank and Germany’s KfW. We find that the biggest constraint from Basel III comes less from its levels of comprehensiveness and complexity and more from tightening the levels of capital requirements and demanding better capital quality. The disincentive to the use of internal models and changes in the method for the calculation of operational risks may result in a substantial increase in required capital. Meanwhile, the new large exposure rule may dilute the banks’ focus on large, infrastructure projects; the high-risk weights for exposures to project finance and equity may hinder NDBs from using these financing modalities extensively to support large and complex projects and activities that involve innovation financing.

Suggested Citation

  • Ricardo Gottschalk & Lavinia B. Castro & Jiajun Xu, 2022. "Should National Development Banks be Subject to Basel III?," Review of Political Economy, Taylor & Francis Journals, vol. 34(2), pages 249-267, April.
    • Handle: RePEc:taf:revpoe:v:34:y:2022:i:2:p:249-267
    DOI: 10.1080/09538259.2021.1977541
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/09538259.2021.1977541
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/09538259.2021.1977541?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hu, Bo & Schclarek, Alfredo & Xu, Jiajun & Yan, Jianye, 2022. "Long-term finance provision: National development banks vs commercial banks," World Development, Elsevier, vol. 158(C).
    2. Schclarek, Alfredo & Xu, Jiajun, 2022. "Exchange rate and balance of payment crisis risks in the global development finance architecture," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 79(C).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:revpoe:v:34:y:2022:i:2:p:249-267. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/CRPE20 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.