International Harmonization of Financial Regulation?
The Politics of Global Diffusion of the Basel Capital Accord
Routledge – 2013 – 218 pages
Routledge – 2013 – 218 pages
It is often argued that international financial regulation has been substantially strengthened over the past decades through the international harmonization of financial regulation. There are, however, still frequent outbreaks of painful financial crises, including the recent 2008 global financial crisis. This raises doubts about the conventional claims of the strengthening of international financial regulation.
This book provides an in-depth political economy study of the adoptions in Japan, Korea and Taiwan of the 1988 Basel Capital Accord, the now so-called Basel I, which has been at the center of international banking regulation over the past three decades, highlighting the domestic politics surrounding it. The book illustrates that, despite banks’ formal compliance with the Accord in these countries, their compliance was often cosmetic due to extensive regulatory forbearance that allowed their real capital soundness to weaken. Domestic politics thus ultimately determined national implementations of the Accord. This book provides its novel innovative study of the Accord through scores of interviews with bank regulators and analysis of various primary documents. It suggests that the actual effectiveness of international financial regulation relies ultimately on the domestic politics surrounding it. It implies as well that the past trend of international harmonization of financial regulation may be illusory, to at least some extent, in terms of its actual effectiveness.
This book may interest not only political economists but also scholars working on the intersection of law, economics and institutions.
1. Introduction: International Harmonization and Domestic Politics in Passive Adopters Part I: Harmonization 2. Creation of the 1988 Basel Accord 3. Non-Committee Members prior to the Accord 4. External Pressures for Accord Compliance Part II: Compliance 5. Japan: Persistent Cosmetic Compliance 6. South Korea: A Shift from Cosmetic to More Effective Compliance 7. Taiwan: Weakening Effective Compliance 8. Conclusion
Hyoung-kyu Chey is Assistant Professor of International Political Economy at the National Graduate Institute for Policy Studies (GRIPS) in Tokyo. He has a PhD in International Relations from the London School of Economics and Political Science, and worked as an Economist in the Economic Research Institute at the Bank of Korea (South Korea’s central bank) for four years prior to joining GRIPS in 2011. His main research area is the international political economy of money and finance, with a regional specialty in East Asia. His papers have been published in major journals in international relations and economics including International Studies Review, New Political Economy, Regulation & Governance, Asian Survey, The World Economy, Japan and the World Economy, Pacific Economic Review, and Journal of the Asia Pacific Economy.