TY - JOUR
T1 - Responses to global financial standards in emerging markets
T2 - Regulatory neoliberalism and the Basel II Capital Accord
AU - Alvi, Farzad Haider
AU - Williamson, Peter J.
N1 - Publisher Copyright:
© 2021 John Wiley & Sons, Ltd.
PY - 2023/7
Y1 - 2023/7
N2 - This paper examines the diffusion of the Basel II Capital Accord into emerging markets (EMs). The literature on the diffusion of financial standards reinforces determinism: carefully derived standards such as those around financial liberalization are assumed to be applicable to all markets in an effort to promote stability and international harmonization. Attempts to use financial liberalization and macroprudential toolkits such as Basel II, however well intentioned, can increase rather than mitigate financial instability, due in part to unevenness in the adoption of financial standards. We analyse rich, action research data on the response of banks in 19 EMs in Asia, the Middle East, and Eastern Europe to the advent of Basel II. We find heterogeneous rather than universalistic responses, captured as four types of behavioural variations leading to differences in the intensity of diffusion: Reformist, Instigative, Disobliging and Cosmetic. The variations reflect regulatory neoliberalism. The typology contributes to our understanding of the interaction between bank behaviour, regulator stance and institutional context as determinants of the diffusion of global financial standards.
AB - This paper examines the diffusion of the Basel II Capital Accord into emerging markets (EMs). The literature on the diffusion of financial standards reinforces determinism: carefully derived standards such as those around financial liberalization are assumed to be applicable to all markets in an effort to promote stability and international harmonization. Attempts to use financial liberalization and macroprudential toolkits such as Basel II, however well intentioned, can increase rather than mitigate financial instability, due in part to unevenness in the adoption of financial standards. We analyse rich, action research data on the response of banks in 19 EMs in Asia, the Middle East, and Eastern Europe to the advent of Basel II. We find heterogeneous rather than universalistic responses, captured as four types of behavioural variations leading to differences in the intensity of diffusion: Reformist, Instigative, Disobliging and Cosmetic. The variations reflect regulatory neoliberalism. The typology contributes to our understanding of the interaction between bank behaviour, regulator stance and institutional context as determinants of the diffusion of global financial standards.
KW - Basel II Capital Accord
KW - emerging markets
KW - financial standard diffusion
KW - macroprudential policy
KW - regulatory neoliberalism
UR - http://www.scopus.com/inward/record.url?scp=85103240011&partnerID=8YFLogxK
U2 - 10.1002/ijfe.2554
DO - 10.1002/ijfe.2554
M3 - Journal Article
AN - SCOPUS:85103240011
SN - 1076-9307
VL - 28
SP - 2635
EP - 2650
JO - International Journal of Finance and Economics
JF - International Journal of Finance and Economics
IS - 3
ER -