Investigating the disclosure compliance of Basel III in emerging markets: a comparative study between UAE and Indian banks

Abstract

Purpose

This study aims at investigating banks’ compliance with the disclosure requirements of Basel III in two emerging market economies, namely, the United Arab Emirates (UAE) and India. This study also examines the impact of economic factors on the extent of disclosures.

Design/methodology/approach

The authors compare the Basel disclosure practices between UAE and Indian listed banks and have used panel data regression models to investigate the compliance and level of reporting based on three market variables, namely, size, leverage and profitability of listed banks.

Findings

After examining Basel reporting for each of three categories of independent factors, size was found to be the predominant factor influencing the Basel disclosures, followed by profitability and degree of financial leverage. It is prudent for all the banks irrespective of size to capitalize on themselves with an intent to tide over the frequent economic crises and prevent every economic crisis from becoming a full-blown financial crisis.

Practical implications

The findings suggest that there is an urgent need for a high level of concerted action in the context of listed banks in the selected emerging market nations to direct more resources to ensure full compliance with Basel III. The findings inform practitioners in emerging countries of compliance and plan expanded future applications. Investors should consider the BASEL compliance level of Banks before parking their funds in the bank’s stocks. The banks having a higher degree of compliance are expected to be safer than their counterparts having lower Basel compliance.

Originality/value

Many previous studies have examined the implementation of Basel III in general. This study is specific in assessing the compliance with disclosure requirements as prescribed by Pillar III of the Basel norms. To the best of the authors’ knowledge, this is the first research to compare market discipline in emerging markets. Existing studies have either assessed the level of compliance in one individual or similar types of markets. However, this study made a pioneering attempt to compare two different countries in the same category (emerging markets).

Citation

Thomas, S.S., Bansal, M. and Ahmed, I.E. (2023), "Investigating the disclosure compliance of Basel III in emerging markets: a comparative study between UAE and Indian banks", Journal of Financial Regulation and Compliance, Vol. 31 No. 3, pp. 281-297. https://doi.org/10.1108/JFRC-02-2022-0018