Analysis of data from emerging economies suggests that, unless properly managed, the introduction of higher minimum bank capital requirements may well induce an aggregate slowdown or contraction of bank credit in these economies

June 2000 - The Basel Committee has proposed linking capital asset requirements for banks to the banks' private sector ratings. Doing so would reduce the capital requirements for banks that lend prudently in high-income countries; the same incentives would not apply in developing countries....

Analysis of data from emerging economies suggests that, unless properly managed, the introduction of higher minimum bank capital requirements may well induce an aggregate slowdown or contraction of bank credit in these economies