Affiliations: [a] International Laboratory of Decision Choice and Analysis, National Research University Higher School of Economics, Moscow, Russia | [b] Department of Applied Economics, National Research University Higher School of Economics, Moscow, Russia
Correspondence:
[*]
Corresponding author: H.I. Penikas, Department of Applied Economics, National Research University Higher School of Economics, Moscow, Russia. E-mail:[email protected]
Note: [1] The paper
is prepared within the Fundamental Research Program of the National Research
University Higher School of Economics (NRU HSE) with the use of the state
subsidy `5-100' program for the leading universities of the Russian
Federation. Any opinions or claims contained in this research do
not necessarily reflect the views of Higher School of Economics.
Abstract: The Basel Committee on Banking Supervision (BCBS) standards are generally
accepted by 46 countries in the world (28 jurisdictions). However, these
countries differ in terms of details of standards' implementation, i.e.
national discretions take place. In 2012 the Basel Committee launched
Regulatory Compliance Assessment Program (RCAP) to assure that all member
states operate according to rules at least not softer than the original
ones. Standards' unification across countries results in need for less
developed countries to adopt standards faster and in a more stringent form.
One may foresee financial instability exacerbation as an outcome of such
policy. That is why paper objective is to demonstrate that standards' implementation
(RCAP) score is an implicit product of country's macroeconomic and financial
system development. For example, higher share of foreign banks and higher
unemployment are strongly associated with countries that have regulation
significantly different from the Basel original ones (having low compliance
scores finally). This is exactly why standards should be differentiated by
countries. Key message of the paper is that to promote financial stability
regulator should target natural heterogeneity of risk management and risk
regulation instead of that appealing artificial homogeneity (of which RCAP
is one the examples).
Keywords: Basel committee, regulation, RCAP, basel compliance, institute, economic convergence
