Ghosh, Swati R.Sugawara, NaotakaZalduendo, Juan2012-03-192012-03-192011-08-01https://hdl.handle.net/10986/3684This paper examines the factors that determine banking flows from advanced economies to emerging markets. In addition to the usual determinants of capital flows in terms of global push and local pull factors, it examines the role of bilateral factors, such as growth differentials and economic size, as well as contagion factors and measures of the depth in financial interconnectedness between lenders and borrowers. The analysis finds profound differences across regions. In particular, in spite of the severe impact of the global financial crisis, banking flows in emerging Europe stand out as a more stable region than is the case in other developing regions. Assuming that the determinants of banking flows remain unchanged in the presence of structural changes, the authors use these results to explore the short-term implications of Basel III capital regulations on banking flows to emerging markets.CC BY 3.0 IGOADVANCED COUNTRIESADVANCED ECONOMIESADVANCED ECONOMYAGENCY PROBLEMSAMOUNT OF CAPITALAMOUNT OF LOANSASSET PRICESASYMMETRIC INFORMATIONBALANCE OF PAYMENTSBALANCE SHEETBALANCE SHEETSBANK LENDINGBANK OF ENGLANDBANK POLICYBANKING CRISESBANKING INSTITUTIONSBANKING SECTORBANKING SECTOR DEVELOPMENTSBANKING SECTORSBANKING SUPERVISIONBANKING SYSTEMBANKING SYSTEMSBASIS POINTBASIS POINTSBONDBOND FLOWSBOND MARKETSBONDSBORROWERBORROWINGBUSINESS CYCLECAPITAL ACCOUNTCAPITAL ADEQUACYCAPITAL ADEQUACY RATIOSCAPITAL BASECAPITAL FLOWCAPITAL FLOWSCAPITAL INFLOWSCAPITAL MARKETSCAPITAL RATIOCAPITAL RATIOSCAPITAL REQUIREMENTCAPITAL REQUIREMENTSCAPITAL STANDARDSCAPITAL STRUCTURECAPITALIZATIONCOLLATERALCORPORATE GOVERNANCECOST OF CAPITALCOST OF EQUITYCOUNTRY RISKCREDIT AVAILABILITYCREDIT GROWTHCREDIT MARKETCREDIT MARKETSCREDITORCRISIS COUNTRIESCRISIS COUNTRYCROSS-BORDER FLOWSCURRENCYCURRENCY CRISESCURRENT ACCOUNT BALANCECURRENT ACCOUNT DEFICITSDEBTDEBT FLOWSDEBT-EQUITYDEBT-EQUITY SWAPSDEBTORDECLINE IN INVESTMENTDERIVATIVESDEVELOPING COUNTRIESDIVIDENDDIVIDEND PAYMENTSDOMESTIC BANKDOMESTIC CAPITALDUMMY VARIABLEDUMMY VARIABLESDURABLEEMERGING MARKETEMERGING MARKET ECONOMIESEMERGING MARKETSEQUITY CAPITALEQUITY INVESTMENTEQUITY INVESTMENTSEXCHANGE RATE MOVEMENTSEXCHANGE RATE REGIMEEXCHANGE RATESEXPORT GROWTHEXPOSUREEXPOSURESFACTORS OF PRODUCTIONFINANCIAL ASSETFINANCIAL CRISESFINANCIAL CRISISFINANCIAL DEVELOPMENTFINANCIAL FLOWSFINANCIAL INFRASTRUCTUREFINANCIAL INSTITUTIONSFINANCIAL INTEGRATIONFINANCIAL MARKETSFINANCIAL OPENNESSFINANCIAL STABILITYFINANCIAL SYSTEMFINANCIAL TRANSACTIONSFLEXIBLE EXCHANGE RATEFLOW OF INFORMATIONFOREIGN CAPITALFOREIGN DIRECT INVESTMENTFOREIGN EXCHANGEFOREIGN EXCHANGE RESERVEFOREIGN INTERESTFOREIGN MARKETSGLOBAL BANKINGGLOBAL CAPITALGLOBAL ECONOMYGLOBAL FINANCIAL MARKETSGLOBAL RISKSGOVERNMENT POLICIESHOLDINGHOME COUNTRYHOME MARKETHOST COUNTRIESHOST COUNTRYINCOMEINFLATIONINTEREST DIFFERENTIALINTEREST DIFFERENTIALSINTEREST RATEINTEREST RATE DIFFERENTIALINTEREST RATE DIFFERENTIALSINTEREST RATESINTERNATIONAL BANKINTERNATIONAL BANKINGINTERNATIONAL BANKSINTERNATIONAL CAPITALINTERNATIONAL CAPITAL MARKETINTERNATIONAL CREDITINTERNATIONAL DEVELOPMENTINTERNATIONAL ECONOMICSINTERNATIONAL FINANCEINTERNATIONAL FINANCIAL STATISTICSINTERNATIONAL PORTFOLIOINVESTINGINVESTMENT FLOWSINVESTMENT RATESISSUANCESLENDERLENDERSLENDING DECISIONSLENDING SPREADLENDING SPREADSLIQUIDITYLIQUIDITY RISKLOANLOAN PORTFOLIOSLOCAL CURRENCYLONG-TERM EXTERNAL DEBTMACROECONOMIC CONDITIONSMACROECONOMIC POLICIESMACROECONOMIC VARIABLESMACROECONOMICSMARKET INTEREST RATEMARKET PARTICIPANTSMARKET VOLATILITYMIDDLE-INCOME COUNTRIESMINIMUM CAPITAL REQUIREMENTSMONETARY AUTHORITIESMONEY MARKETNATIONAL SAVINGSOFF BALANCE SHEETOPERATING EFFICIENCYOUTPUTPOLITICAL STABILITYPORTFOLIOPORTFOLIO FLOWSPORTFOLIO INVESTMENTPORTFOLIO INVESTMENTSPOSITIVE COEFFICIENTPRIVATE CAPITALPRIVATE CAPITAL FLOWSPRIVATE CAPITAL INFLOWSPROBABILITY OF DEFAULTPRODUCTION STRUCTUREPROFITABILITYPRUDENTIAL REGULATIONPRUDENTIAL REGULATIONSPUSH FACTORPUSH FACTORSRATE OF RETURNREAL EXCHANGE RATEREGIONAL DUMMIESREGIONAL DUMMYREGULATORY CAPITALREGULATORY FRAMEWORKREPAYMENTSRETAINED EARNINGSRETURNSRISK AVERSIONRISK FACTORRISK MANAGEMENTRISKY ASSETSSAVINGS RATESSOVEREIGN RISKSUBSIDIARIESTIER 1 CAPITALTIER 2 CAPITALTRADE FLOWSTRADINGTRANSACTIONTRANSACTION COSTSTRANSPARENCYTRANSPORTTREASURIESVALUATIONWorld Bank10.1596/1813-9450-5769