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The impact of regulatory requirements on the banking flows to emerging countries

Author

Listed:
  • Michel Boutillier

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

  • Samira Hellou

    (EconomiX - EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)

Abstract

The strengthening of regulatory requirements, along with evolution in banking regulations, can have a negative impact on the external bank financing of emerging countries heavily dependent on this type of financing. Indeed, several studies have aroused fears about the potential effects of significant regulatory adjustments on bank lending to emerging markets. This paper presents a trial to estimate the sensitivity of the banking flows to increased regulatory requirements. We adopt a macroeconomic approach based on the determinants of cross-border banking claims flows from banks located in 19 developed countries to 37 emerging countries. The results of the GMM estimation confirm the negative impact of regulatory requirements on the banking flows to emerging countries, the significant impact of business openness and the negative effect of bank financialization on banking flows to these countries. The results also show that countries rated as speculative grade are influenced by the regulatory requirements, unlike countries rated in investment grade category.
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Suggested Citation

  • Michel Boutillier & Samira Hellou, 2017. "The impact of regulatory requirements on the banking flows to emerging countries," Post-Print hal-01549858, HAL.
    • Handle: RePEc:hal:journl:hal-01549858
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    References listed on IDEAS

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    1. Guillermo A. Calvo & Leonardo Leiderman & Carmen M. Reinhart, 1993. "Capital Inflows and Real Exchange Rate Appreciation in Latin America: The Role of External Factors," IMF Staff Papers, Palgrave Macmillan, vol. 40(1), pages 108-151, March.
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    More about this item

    Keywords

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    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F34 - International Economics - - International Finance - - - International Lending and Debt Problems
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation

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