Impact of the 1988 Basle Accord on International Banks

Journal of Finance, Vol. 51, No. 4, pp. 1321-1346, September 1996

26 Pages Posted: 19 May 1998 Last revised: 17 Sep 2009

Date Written: 1996

Abstract

The ostensible purpose of the Basle Accord was to standardize bank-capital regulations among the twelve leading industrial countries. Its ulterior goal was to "level the playing field" by eliminating a funding-cost advantage of Japanese banks that had allowed them to capture more than one-third of international lending. The wealth gain for Japanese bank shareholders was 31.63 percent Wealth effects for shareholders of non-Japanese banks were not significant. These results suggest that the Basle Accord did not eliminate the pricing advantage of Japanese banks, challenging the non-Japanese regulators' contention that the regulation would help level the playing field.

Keywords: Basle Accord, international banks, Japanese, world-market index, international regulation

JEL Classification: G21

Suggested Citation

Wagster, John D., Impact of the 1988 Basle Accord on International Banks (1996). Journal of Finance, Vol. 51, No. 4, pp. 1321-1346, September 1996, Available at SSRN: https://ssrn.com/abstract=7494

John D. Wagster (Contact Author)

Wayne State University ( email )

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