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Financial services industry --- Financial institutions --- Liquidity (Economics) --- Law and legislation --- Basel III

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This paper examines the factors that determine banking flows from advanced economies to emerging markets. In addition to the usual determinants of capital flows in terms of global push and local pull factors, it examines the role of bilateral factors, such as growth differentials and economic size, as well as contagion factors and measures of the depth in financial interconnectedness between lenders and borrowers. The analysis finds profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, banking flows in emerging Europe stand out as a more stable region than is the case in other developing regions. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, the authors use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.

Access to Finance --- Banks & Banking Reform --- Basel III --- Capital flows --- Cross-border banking flows --- Debt Markets --- Economic Theory & Research --- Emerging Markets --- Finance and Financial Sector Development --- Financial crises --- Financial linkages

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This paper investigates the impact of the new capital requirements introduced under the Basel III framework on bank lending rates and loan growth. Higher capital requirements, by raising banks’ marginal cost of funding, lead to higher lending rates. The data presented in the paper suggest that large banks would on average need to increase their equity-to-asset ratio by 1.3 percentage points under the Basel III framework. GMM estimations indicate that this would lead large banks to increase their lending rates by 16 basis points, causing loan growth to decline by 1.3 percent in the long run. The results also suggest that banks’ responses to the new regulations will vary considerably from one advanced economy to another (e.g. a relatively large impact on loan growth in Japan and Denmark and a relatively lower impact in the U.S.) depending on cross-country variations in banks’ net cost of raising equity and the elasticity of loan demand with respect to changes in loan rates.

Banks and banking --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- State supervision --- Econometric models. --- Banks and Banking --- Finance: General --- Investments: Stocks --- Economic Theory --- Industries: Financial Services --- Financial Risk Management --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Agriculture: Aggregate Supply and Demand Analysis --- Prices --- General Financial Markets: Government Policy and Regulation --- Financial Crises --- Investment & securities --- Economic theory & philosophy --- Financial services law & regulation --- Economic & financial crises & disasters --- Loans --- Stocks --- Demand elasticity --- Basel III --- Economic theory --- Financial regulation and supervision --- Financial crises --- Elasticity --- Economics --- Denmark

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The causes of the global financial crisis were multi-faceted but revealed still unresolved weaknesses in national and international financial oversight and resolution frameworks. In particular, many governments in the crisis-hit countries had to provide unprecedented levels of support to contain the crisis and protect financial stability. These interventions have not only contributed to a significant increase in sovereign exposures but, in many countries, they have also risked weakening market discipline and worsening moral hazard.

Banks and Banking --- Finance: General --- Investments: Stocks --- General Financial Markets: Government Policy and Regulation --- Corporate Finance and Governance: General --- Corporate Finance and Governance: Government Policy and Regulation --- Current Account Adjustment --- Short-term Capital Movements --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Pension Funds --- Non-bank Financial Institutions --- Financial Instruments --- Institutional Investors --- Financial Institutions and Services: Government Policy and Regulation --- Finance --- Banking --- Investment & securities --- Financial services law & regulation --- Contingent capital --- Stocks --- Contingent convertible capital --- Capital adequacy requirements --- Basel III --- Financial services industry --- Banks and banking --- Asset requirements --- State supervision --- United States

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This note estimates potential output for France during 1980–2010, using three distinct approaches, and discusses long-term growth prospects. The focus on capital taxation highlights the need for a broader reform of the French tax system to address the features that hamper job growth, investment, and productivity growth. This paper analyzes the impact of Basel III capital requirements on French banks and the French economy, and proposes policy recommendations. French banks should be able to meet the new requirements through earnings retention.

Industrial productivity --- Economic development --- Taxation --- Banks and banking --- Agricultural banks --- Banking --- Banking industry --- Commercial banks --- Depository institutions --- Finance --- Financial institutions --- Money --- Development, Economic --- Economic growth --- Growth, Economic --- Economic policy --- Economics --- Statics and dynamics (Social sciences) --- Development economics --- Resource curse --- State supervision --- Banks and Banking --- Finance: General --- Corporate Taxation --- Production and Operations Management --- Personal Income and Other Nonbusiness Taxes and Subsidies --- Taxation, Subsidies, and Revenue: General --- General Financial Markets: Government Policy and Regulation --- Business Taxes and Subsidies --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Macroeconomics: Production --- Welfare & benefit systems --- Financial services law & regulation --- Public finance & taxation --- Macroeconomics --- Corporate & business tax --- Basel III --- Corporate income tax --- Labor taxes --- Social security contributions --- Financial regulation and supervision --- Taxes --- Tax wedge --- Tax policy --- Corporations --- Income tax --- Production --- Economic theory --- Social security --- France