This paper investigates the consequences of Basel II for international capital flows to emerging markets. The paper shows that the magnitude of effects critically depends on a number of assumptions, including: the mapping of risk weights to ratings, assumptions about required return on capital,...

China’s economy has expanded by leaps and bounds, with dazzling progress since it first opened to foreign investment and reform in 1978. Over the last 25 years and after a long period of economic autarky, the country has emerged as a major player in world trade. Its accession to the World...