This project employs a mixed methods approach. It compiles a new dataset of over 100 jurisdictions that were not members of the Basel Committee in 2008 and identifies the drivers of Basel adoption using spatial lags and spatial autoregressive models. The large-n studies are complemented by in-depth case studies of 11 countries on 3 continents using archival research and semi-structured interviews with regulators, bankers, and financial experts.
When using this dataset, please cite: Emily Jones and Alexandra O. Zeitz, "Regulatory Convergence in the Financial Periphery: How Interdependence Shapes Regulators' Decisions", Global Economic Governance Working Paper 2019/141.
This dataset contains time-series data on the extent of countries' adoption of the Basel banking standards, disaggregated by individual components that make up the standards. The majority of the data has been coded from the Financial Stability Institute's surveys of adoption of Basel standards in countries outside of the Basel Committee on Banking Standards.1 The surveys were conducted annually 2012-2015, with responding countries indicating the year they initially introduced individual rules as part of the Basel banking standards. This allows us to backdate the date a rule was initially adopted, creating a time-series of adoption from 2004 to 2015.
The survey asks countries to indicate their level of adoption on a 1-4 scale, where 1 = Draft regulation not published, 2 = Draft regulation published, 3 = Final rule published, 4 = Final rule in force. We code countries as having adopted the standard if they respond with a 3 or a 4, i.e, they have a final rule published or in force. We thus set indicators of countries' adoption of the Basel components equal to 1 (adoption) if the FSI survey response is a 3 or 4, and equal to 0 (no adoption) if the FSI survey response is a 1 or 2. Additional data on Basel adoption among countries that are members of the Basel Committee was collected from the websites of central banks and supervisory authorities.
The dataset contains information on countries' adoption across three sets of Basel standards:
Basel II: In 2004, the Basel Committee introduced Basel II, a new standard for banking regulation, made up of ten subcomponents. The ten binary variables starting with "bii" capture whether a country has adopted a given subcomponent of Basel II in a given year. The rules are categorized in three "pillars": Pillar 1 on capital requirements, pillar 2 on supervision, and pillar 3 on market discipline. The first eight of the ten subcomponents are in pillar 1, concerning different ways of measuring risk in order to assess capital requirements.
Basel II.5: In 2009, in response to the global financial crisis, the Basel Committee released a series of updates to the rules contained in Basel II. This intermediate set of rules was referred to as Basel II.5, since they simply revised the existing rules. The four binary variables starting with "bii v" capture whether a country has adopted a given subcomponent of Basel II.5 in a given year.
Basel III: In 2011, the Basel Committee introduced a new set of banking standard to update banking regulations in the wake of the Global Financial Crisis. This standard, Basel III, contained new rules intended to address some of the vulnerabilities that had led to the Global Financial Crisis, including a counter-cyclical capital buffer and rules for "too big to fail" systemically important banks. The eight binary variables starting with "biii" capture whether a country has adopted a given subcomponent of Basel III in a given year. The subcomponents of Basel III were introduced over time, with some implemented from 2011 onwards, and others not introduced until 2013 or 2014. The time-series data reflects this.