This brief summarises and sets in context the results of the DFID-ESRC Growth Research Programme (DEGRP) funded research project ‘Navigating global banking standards’. With a focus on low- and middle-income countries, the project examined why countries adopt global banking rules which are designed to enhance global banking stability, but which may not be appropriate to the context of the poorest countries.
- Designed by a group of developed and major emerging countries, the so-called Basel global banking rules have also been adopted by nonmembers.
- There are two main drivers for the adoption of Basel II and III rules. First, for politicians to signal openness to inward investment; and second, to facilitate outward investment by international banks.
- It is important that the Basel Committee on Banking Supervision, the Financial Stability Board and International Financial Institutions encourage financial rules that are appropriate for developing countries. This can be achieved through better engagement with developing countries during the standard-setting process.
Dirk Willem te Velde