How the Proposed Basel Guidelines on Rating-Agency Assessments Would Affect Developing Countries

Ferri, Giovanni ; Liu, Li-Gang ; Majnoni, Giovanni

World Bank, Washington, DC

关键词: BANK CAPITAL;    BANK CAPITAL REGULATION;    BANK DEPOSITS;    BANK RATINGS;    BANKING CRISES;   

DOI  :  10.1596/1813-9450-2369
RP-ID  :  WPS2369

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

Using historical data on sovereign andindividual borrowers, the authors assess the potentialimpact on non-high-income countries of linking capital assetrequirements for banks to private sector ratings, as theBasel committee has proposed. They show that linkingbank's capital asset requirements to external ratingswould have undesirable effects for developing countries.First, ratings of banks and corporations in developingcountries are less common, so capital asset requirementswould be practically insensitive to improvements in thequality of assets-widening the gap between banks of equalfinancial strength in higher- and lower-income countries.Second, bank and corporate ratings in developing countries(unlike their counterparts in high-income countries) arestrongly linked to the sovereign ratings for the country-andappear to be strongly related (asymmetrically) to changes inthe sovereign ratings. A sovereign downgrading would bringgreater changes in capital allocations than an upgrading,and would call for larger capital requirements at the verytime access to capital markets was more difficult. Under thenew guidelines, capital requirements in developing countrieswould thus be exposed to the cyclical swings associated withthe revision of sovereign ratings in recent crises.Ultimately, linking banks' capital asset requirementsto private sector ratings would reduce the credit availableto non-high-income countries and make it more costly,limiting economic activity. Bank capital needs in developingcountries would be more volatile than those in high-incomecountries. These findings suggest that the Basel Committeeshould assess the role it proposes assigning to externalratings, to minimize the detrimental impact of theregulatory use of such ratings on developing countries.