Date of Award

5-2005

Degree Type

Dissertation

Degree Name

Doctor of Law (SJD)

Department

Law

First Advisor

Sompong Sucharitkul

Second Advisor

Christian Okeke

Third Advisor

Hamid Shomali

Abstract

This study attempts to address that in search of a just new world order in the global finance what should be the proper national, regional, and international responses to the global financial integration. At first glance, it analyzes the globalization of finance. The impact of globalization on state sovereignty is also demonstrated. In this regard, this study seeks to reconceptualize the traditional notion of state sovereignty. Here it highlights the increased interaction and interdependence between states and non-state actors in the global economy. Then, this study moves on to the anatomy of the dynamics of global governance through government networks- independent national regulatory agencies- among states in terms of trans-governmentalism. In the context of an increasingly global economy, it acknowledges the rise of trans governmental regulatory organizations in various areas and the achievements of these government networks, but it attempts to point to problems with the networks. With the investigation of the trans-governmental theory in light of global governance, this study identifies the features of trans-governmental financial regulatory organizations. Thereafter, the focus of this study shifts to the examination of international banking regulation and supervision under the auspices of the Basel Committee on Banking Supervision (Basel Committee). As noted, no other sector than banking has become more global in its operations, and thus more difficult to monitor and supervise it. As such, global convergence in banking has made greater strides than in any other financial sector. However, some skepticism has run over the argument that global standards in banking have been established by the international financial community's concerns about the safety and soundness of the global financial system. Arguably, hegemony of Western powers began a drive to move in terms of hegemonic stability more than their concerns about a global banking crisis. In this context, this study attempts to assess the Basel Committee's bank supervisory standards and capital adequacy rules, and thereby rethink whether global convergence in banking regulation is desirable and inevitable. To that end, it seeks to address the impetus for the creation of the Basel Committee, and explore driving forces behind the internationalization of bank regulatory and supervisory standards. Following the theoretical analysis of systemic risk, historical experiences of bank failures are reviewed to answer the question about whether systemic risk has really played a key role in the internationalization of bank regulatory and supervisory standards. More importantly, this study attempts to explore the origins of the Basel Accord on bank capital adequacy. To do so, it largely relies on current theories on the process of negotiating the capital adequacy standards in the areas of political science and international political economy. At this point, this study takes a position as a break against the force of international market failure logic that has enjoyed an exceptionally positive reception among economists, political scientists, and legal experts. Nonetheless, it does not intend to freeze the international coordination and cooperation of banking regulation. Given the understanding of the politics behind the creation of the Basel Accord, this study evaluates the Basel Accord of 1988 and the new capital adequacy framework (Basel II), and then moves beyond the assessment of the capital adequacy standards. In doing so, it attempts to draw lessons from Basel toward a just world order in the global finance. In search of a new international financial order, this study analyzes the dilemmas of international financial regulation. Then, the role of private regulation is examined. While this study stresses the importance of the private sector in the governance of financial system at national, regional, and international levels, it addresses what the proper balance should be between the public authority and private interests for the appropriate public-private partnership. Given the difficulties of institutional collaboration at the international level, this study emphasizes the importance of regional cooperation for global financial governance. In this way, it seeks to contribute to an assessment of proper balance between the market and regulatory discipline that would ensure that financial institutions have sufficient opportunities to compete fairly and profitably in a global marketplace. Finally, this study attempts to answer the question of what should be the appropriate national, regional, and international responses to global financial integration, and thus provide a new paradigm for the just world order in global finance.

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