The Impact of Regulatory Requirements on the Banking Flows to Emerging Countries

36 Pages Posted: 4 Jun 2016 Last revised: 3 Mar 2017

See all articles by Samira Hellou

Samira Hellou

Université Paris Ouest - Nanterre, La Défense, EconomiX, Students

Michel Boutillier

Banque de France

Date Written: March 31, 2016

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 positive impact of business openness and the significant 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..

Keywords: bank flows, emerging countries, pull and push factors, regulatory requirements

JEL Classification: F21, F34, G18

Suggested Citation

Hellou, Samira and Boutillier, Michel, The Impact of Regulatory Requirements on the Banking Flows to Emerging Countries (March 31, 2016). Available at SSRN: https://ssrn.com/abstract=2789381 or http://dx.doi.org/10.2139/ssrn.2789381

Samira Hellou (Contact Author)

Université Paris Ouest - Nanterre, La Défense, EconomiX, Students ( email )

200 Avenue de la République
Nanterre Cedex, Nanterre Cedex 92000
France
0033 (Phone)

HOME PAGE: http://economix.fr/fr/membres/?id=1749

Michel Boutillier

Banque de France ( email )

Paris
France

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