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Financial governance of banking supervision

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Author Info
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/informes/be/docs/dt0725e.pdf
File Format: application/pdf
File Function: First version, July 2007
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Publisher Info
Paper provided by Banco de España in its series Banco de España Working Papers with number 0725.

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

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Related research
Keywords: banking supervision budgetary governance central banks financial authorities

Find related papers by JEL classification:
D78 - Microeconomics - - Analysis of Collective Decision-Making - - - Positive Analysis of Policy-Making and Implementation
G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Mortgages
G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
O17 - Economic Development, Technological Change, and Growth - - Economic Development - - - Formal and Informal Sectors; Shadow Economy; Institutional Arrangements
P16 - Economic Systems - - Capitalist Systems - - - Political Economy of Capitalism

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  2. 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. [Downloadable!]
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    Other versions:
  5. 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. [Downloadable!]
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  15. María J. Nieto & Larry D. Wall, 2007. "Preconditions for a successful implementation of supervisors' Prompt Corrective Action: Is there a case for a banking standard in the EU?," Banco de España Working Papers 0702, Banco de España. [Downloadable!]
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  16. Rafael Repullo, 2000. "Who should act as lender of last resort? an incomplete contracts model," Proceedings, Federal Reserve Bank of Cleveland, pages 580-610.
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  17. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring. [Downloadable!] (restricted)
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