The implications of the introduction of Basel II in terms of risk-weighted assets andinternationalization exposure for European banks

Sammanfattning: Considering a sample of sixty-two European banks, I investigate the implications of theintroduction of Basel II in terms of risk-weighted assets and internationalization exposure. Ichallenge the Market Risk and Portfolio Diversification theories jointly with regulative factors ofprobability of default and asset correlation. I find that after the introduction of the Accord, thewhole sample increased in total assets, eventuality discarded by previous authors. Furthermore, Ifound that under a highly financial regulated environment, financial institutions subjected to BaselII increased statistically their level of internationalization. Outcome that is supported by thePortfolio Diversification theory and asset correlation concept.