The challenges international banking standards pose for peripheral developing countries

Abstract

The aim of this chapter is to provide readers with a solid grasp of the regulatory context in peripheral developing countries, and an understanding of the Basel framework, so that they can better understand the magnitude of the policy decisions that regulators in peripheral countries are taking when they decide whether, and to what extent, to harmonize their national regulations with international standards. It explains how the context for regulating banks in peripheral developing countries differs from that in the advanced countries that dominate international standard-setting bodies. It reviews the evidence on the appropriateness of international standards for regulating banks in peripheral developing countries, particularly low- and lower-middle income countries, and highlights the challenges that international standards pose. The chapter reviews the cross-country evidence that we have to date on the implementation of international banking standards in countries outside of the Basel Committee. The data reveals a high level of variation in the adoption of international standards across countries including among low- and lower-middle-income countries.