Economic Effects of Implementation of Basel (II) Accords on Economic Growth of Developing Country

Fluctuations in economic growth in the banking system is made more prominent at The recent financial crisis. Appropriate legal framework and regulations that can improve stability, increase the health of the banking system and help the reduce costs in this sector. Stable banking system could also improve stability and underlying economic growth through efficient resource allocation in the long run. Basel agreement is the One of the most important rules for monitoring a stable and healthy bankingsystem. Its implementation through improved capital adequacy requirements, improved banking supervision, improved transparency in the banking system can provide a perfect platform for stability and boost economic growth. The purpose of this paper is assessing the economic effect of Basel agreement on economic growth of developing countries who accept it. Compliance with minimum capital adequacy requirement for banks will reduce credit in the short run and reduce economic growth.Therefore, the dynamic panel data methods and statistics in developing countries during the period 2000-2010 are used. Results of the survey suggest that there is a negative relationship between capital adequacy and economic growth.

کلیدواژه ها:

Economic Growth ، Health and Banking Stability ، Prudential Regulation