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Financial governance of banking supervision

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  • Donato Masciandaro

    ()
    (University of Bocconi - Department of Economics (DEP))

  • María J. Nieto

    ()
    (Banco de España)

  • Henriëtte Prast

    ()
    (de Nederlandsche Bank (Netherlands Central Bank))

Abstract

This article analyses the economics of financing banking supervision and attempts to respond to two questions: What are the most common financing practices? Can the differences in current financing practices be explained by country specific factors? We perform an empirical analysis that identifies the determinants of the financing structure of banks´ prudential supervision using a sample of 90 banking supervisors (central banks and financial authorities). We conclude that supervisors in central banks are more likely publicly funded, while financial authorities are more likely funded via a levy on the regulated banks. The financing rule is also explained by the structure of the financial systems. Public funding is more likely in bank oriented structures. Finally, the geographical factor is also significant: European bank supervisors are more oriented towards the private funding regime. In general, we do not find evidence of the role of the political factor, the size of the economy, the level of development and the legal tradition.

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File URL: http://www.bde.es/f/webbde/SES/Secciones/Publicaciones/PublicacionesSeriadas/DocumentosTrabajo/07/Fic/dt0725e.pdf
File Function: First version, July 2007
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Bibliographic Info

Paper provided by Banco de Espa�a in its series Banco de Espa�a Working Papers with number 0725.

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Length: 31 pages
Date of creation: Jul 2007
Date of revision:
Handle: RePEc:bde:wpaper:0725

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Keywords: banking supervision; budgetary governance; central banks; financial authorities;

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  1. Demirguc, Asli & Laeven, Luc & Levine, Ross, 2003. "The impact of bank regulations, concentration, and institutions on bank margins," Policy Research Working Paper Series 3030, The World Bank.
  2. Udaibir S. Das & Marc Quintyn & Kina Chenard, 2004. "Does Regulatory Governance Matter for Financial System Stability? An Empirical Analysis," IMF Working Papers 04/89, International Monetary Fund.
  3. Alberto Alesina & Guido Tabellini, 2005. "Bureaucrats or Politicians?," Levine's Working Paper Archive 784828000000000638, David K. Levine.
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  6. Daron Acemoglu & Simon Johnson & James A. Robinson, 2001. "The Colonial Origins of Comparative Development: An Empirical Investigation," American Economic Review, American Economic Association, vol. 91(5), pages 1369-1401, December.
  7. Alessandro Gambini & Salim M. Darbar & Marco Arnone, 2007. "Banking Supervision," IMF Working Papers 07/82, International Monetary Fund.
  8. Kane, Edward J, 1990. " Principal-Agent Problems in S&L Salvage," Journal of Finance, American Finance Association, vol. 45(3), pages 755-64, July.
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  10. Michael Taylor & Marc Quintyn, 2002. "Regulatory and Supervisory Independence and Financial Stability," IMF Working Papers 02/46, International Monetary Fund.
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  13. Richard K. Abrams & Michael Taylor, 2000. "Issues in the Unification of Financial Sector Supervision," IMF Working Papers 00/213, International Monetary Fund.
  14. Demirguc-Kunt, Asli & Levine, Ross, 1999. "Bank-based and market-based financial systems - cross-country comparisons," Policy Research Working Paper Series 2143, The World Bank.
  15. Gillian Garcia & Henriette Prast, 2003. "Depositor and Investor Protection in the EU and the Netherlands: A Brief History," Research Series Supervision (discontinued) 54, Netherlands Central Bank, Directorate Supervision.
  16. , Richmond Law & Tax (ed.), 2005. "Banking Regulators," OUP Catalogue, Oxford University Press, number 9781904501367, September.
  17. Repullo, Rafael, 2000. "Who Should Act as Lender of Last Resort? An Incomplete Contracts Model," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 32(3), pages 580-605, August.
  18. Larry Wall & Maria Nieto, 2006. "Precondition for a Successful Implementation of Supervisors' Primpt Corrective Action: Is There a Case for a Banking Standard in the EU?," FMG Special Papers sp165, Financial Markets Group.
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  20. Giorgio Di Giorgio & Carmine Di Noia & Laura Piatti, 2000. "Financial Market Regulation: The Case of Italy and a Proposal for the Euro Area," Center for Financial Institutions Working Papers 00-24, Wharton School Center for Financial Institutions, University of Pennsylvania.
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Cited by:
  1. Isabel Argimón & Pablo Hernández de Cos, 2008. "The determinants of budget balances of the regional (Autonomous) governments," Banco de Espa�a Working Papers 0803, Banco de Espa�a.
  2. Maravall, A. & del Rio, A., 2007. "Temporal aggregation, systematic sampling, and the Hodrick-Prescott filter," Computational Statistics & Data Analysis, Elsevier, vol. 52(2), pages 975-998, October.
  3. Aitor Erce, 2008. "A structural model of sovereign debt issuance: assessing the role of financial factors," Banco de Espa�a Working Papers 0809, Banco de Espa�a.

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