Banks dominate the financial sectors of Low and Lower-Middle Income Countries (LMICs) and effective regulation is vital for financial stability and growth.
Our project seeks to find out whether, and to what extent, government regulators are basing their decisions on international banking standards (Basel I, II, and III), and the reasons for this.
LMICs have the least developed financial sectors and in many ways find themselves at the periphery of the global financial system. Because their banking sectors are relatively small, these countries rarely figure in global policy debates about banking regulation, are scarcely mentioned in the boardrooms of global banks, and are the subject of few academic studies.
Even though international banking standards are not designed for LMICs, our research shows how financial interdependence provides powerful market and reputational incentives to adopt them. As a result, LMICs face strong incentives to adopt overly complex regulations that are a poor match for their economic and financial development level.
Our findings suggest that reforms are needed to international standards-setting institutions to ensure that the interests of LMICs are better reflected.
Published policy briefs:
- Room to Manoeuvre: How Developing Countries Can Tailor Basel Standards
- Mind the Gap: Making Basel Standards Work for Developing Countries
- Jones, E., & Zeitz, A. O. (2017). The Limits of Globalizing Basel Banking Standards. Journal of Financial Regulation, 3(1), 89–124.
- Jones, E. (2014). Global Banking Standards and Low-income Countries: Helping or Hindering Effective Regulation? GEG Working Paper No. 91. Oxford: Blavatnik School of Government.
- Jones, E., & Knaack, P. (2017). The Future of Global Financial Regulation. GEG Working Paper No. 127. Oxford: Blavatnik School of Government.
DFID-ESRC Growth Research Programme, Grant ES/L012375/1