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Bank regulation and supervision in the context of the global crisis

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  • Cihak, Martin
  • Demirgüç-Kunt, Asli
  • Martinez Peria, Maria Soledad
  • Mohseni-Cheraghlou, Amin

Abstract

We provide novel evidence on regulatory and supervisory practices around the world in the context of the global financial crisis, using data from a new World Bank survey covering 143 countries. Analyzing differences between crisis and non-crisis countries, we find that crisis countries had less stringent and more complex definitions of capital but exhibited lower actual capital ratios, faced fewer restrictions on non-bank activities, were less strict in the regulatory treatment of bad loans, were less able to demand banks to adjust their equity, provisions or compensation schemes, and had greater disclosure requirements but weaker incentives for private agents to monitor banks. Comparing regulatory and supervisory practices before and after the global crisis, there is evidence of few changes. While capital ratios increased, bank governance and resolution regimes were strengthened, private sector incentives to monitor banks deteriorated.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Financial Stability.

Volume (Year): 9 (2013)
Issue (Month): 4 ()
Pages: 733-746

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Handle: RePEc:eee:finsta:v:9:y:2013:i:4:p:733-746

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Web page: http://www.elsevier.com/locate/jfstabil

Related research

Keywords: Banking; Regulation; Supervision; Survey;

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References

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  1. Markus K. Brunnermeier, 2009. "Deciphering the Liquidity and Credit Crunch 2007-2008," Journal of Economic Perspectives, American Economic Association, vol. 23(1), pages 77-100, Winter.
  2. Beck, T.H.L. & Demirgüç-Kunt, A. & Levine, R., 2006. "Bank concentration, competition, and crises: First results," Open Access publications from Tilburg University urn:nbn:nl:ui:12-3125498, Tilburg University.
  3. Barth, James R. & Caprio, Gerard Jr. & Levine, Ross, 2004. "Bank regulation and supervision: what works best?," Journal of Financial Intermediation, Elsevier, vol. 13(2), pages 205-248, April.
  4. Caprio, Gerard, Jr. & Demirguc-Kunt, Asli & Kane, Edward J., 2008. "The 2007 meltdown in structured securitization : searching for lessons, not scapegoats," Policy Research Working Paper Series 4756, The World Bank.
  5. Ross Levine, 2010. "An autopsy of the US financial system: accident, suicide, or negligent homicide," Journal of Financial Economic Policy, Emerald Group Publishing, vol. 2(3), pages 196-213, August.
  6. Asli Demirgüç-Kunt & Luis Servén, 2010. "Are All the Sacred Cows Dead? Implications of the Financial Crisis for Macro- and Financial Policies," World Bank Research Observer, World Bank Group, vol. 25(1), pages 91-124, February.
  7. Barth, James R. & Caprio, Gerard Jr. & Levine, Ross, 2012. "Guardians of Finance: Making Regulators Work for Us," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262017393, December.
  8. Barth, James R. & Caprio Jr, Gerard & Levine, Ross, 2001. "The regulation and supervision of banks around the world - a new database," Policy Research Working Paper Series 2588, The World Bank.
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