The political economy of bank regulation in developing countries: risk and reputation
On 22 January, Emily Jones delivered a talk on the politics of banking regulations in developing countries at SOAS as part of the Centre for Global Finance (CGF) Seminar Series. In the talk, chaired by CGF Director Professor Victor Murinde, Emily presented findings from research that is explored in depth in her forthcoming book, The Political Economy of Bank Regulation in Developing Countries: Risk and Reputation (Oxford University Press, 2020). The research, funded by the Department for International Development and the Economic and Social Research Council, explored the politics of banking regulation in eleven countries across Africa, Asia and Latin America.
International banking standards are intended for the regulation of large, complex, risk-taking international banks that operate across the globe, with trillions of dollars in assets. Despite this, financial globalisation generates strong incentives for banks in low- and lower-middle-income countries (LMICs) to adopt these standards; for example, to attract foreign investors, enhance their reputation to facilitate expansion abroad, or to try and safeguard against financial instability. However, implementation of these norms is not uniform across LMICs, with financial regulators in these countries varying widely on how many and which components of Basel standards they adopt and implement.
The forthcoming book features contributions from a range of scholars with different disciplinary and theoretical backgrounds, and presents a single analytical framework through which to analyse the responses of LMICs to international banking standards. The research contributes to understanding the ways in which governments and firms in the core of global finance powerfully shape regulatory decisions in the periphery, and the ways that governments and firms from peripheral developing countries manoeuvre within the constraints and opportunities created by financial globalisation.