The role of cost of capital in regulatory capital discrepancies among developing countries

Capital as a regulatory instrument has been shown to contribute to competitiveness distortions between developed and developing countries. There is a dearth of literature that analyses the possibility of further competitiveness discrepancies to which capital requirements may contribute among develop...

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Bibliographic Details
Main Authors: Johann Jacobs, Gary van Vuuren
Format: Article
Language:English
Published: AOSIS 2015-03-01
Series:South African Journal of Economic and Management Sciences
Online Access:https://sajems.org/index.php/sajems/article/view/869
Description
Summary:Capital as a regulatory instrument has been shown to contribute to competitiveness distortions between developed and developing countries. There is a dearth of literature that analyses the possibility of further competitiveness discrepancies to which capital requirements may contribute among developing countries. This article explores whether regulatory capital requirements lead to unequal competitive conditions between developing countries based on their costs of capital. It also attempts to identify drivers of such discrepancies. Data of 52 financial institutions from 20 countries spread across 4 geographical regions are used for the analysis.
ISSN:1015-8812
2222-3436