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Basel Core Principles and Bank Risk

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Author Info

  • Asli Demirgüç-Kunt
  • Enrica Detragiache

Abstract

This paper studies whether compliance with the Basel Core Principles for effective banking supervision (BCPs) is associated with bank soundness. Using data for over 3,000 banks in 86countries, we find that neither the overall index of BCP compliance nor its individual components are robustly associated with bank risk measured by Z-scores. We also fail to find a relationship between BCP compliance and systemic risk measured by a system-wide Zscore.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 10/81.

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Length: 27
Date of creation: 01 Mar 2010
Date of revision:
Handle: RePEc:imf:imfwpa:10/81

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Related research

Keywords: Bank soundness; Basel Core Principles; Bank reforms; Bank supervision; Banks; Credit risk; Financial risk; regulation; banking; standards; bank risk; regulations; banking supervision; banking system; financial strength; bank regulation; standards and codes; capital regulation; bank performance; bank licensing; banking sector; consolidated supervision; bank assets; banking crisis; return on equity; capital adequacy; return on assets; global standard; bank management; banking crises; regulatory standards; international accounting standards; banking sector development; bank loans; bank balance sheets; banking systems; bank portfolios; bank risk taking; internal control; bank equity; banking license; bank governance; bank data; bank regulators; bank ratings; bank credit; prudential requirement; banking laws; bank activities; banking system fragility; bank stability; global standards; financial strength rating;

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References

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  1. Richard Podpiera, 2006. "Does Compliance with Basel Core Principles Bring Any Measurable Benefits?," IMF Staff Papers, Palgrave Macmillan, vol. 53(2), pages 5.
  2. David Marston, 2001. "Financial System Standards and Financial Stability," IMF Working Papers 01/62, International Monetary Fund.
  3. Demirgüç-Kunt, AslI & Detragiache, Enrica & Tressel, Thierry, 2008. "Banking on the principles: Compliance with Basel Core Principles and bank soundness," Journal of Financial Intermediation, Elsevier, vol. 17(4), pages 511-542, October.
  4. Boyd, John H. & Runkle, David E., 1993. "Size and performance of banking firms : Testing the predictions of theory," Journal of Monetary Economics, Elsevier, vol. 31(1), pages 47-67, February.
  5. Kashyap, Anil K. & Rajan, Raghuram G. & Stein, Jeremy C., 2008. "Rethinking capital regulation," Proceedings - Economic Policy Symposium - Jackson Hole, Federal Reserve Bank of Kansas City, pages 431-471.
  6. Martin Cihák & Alexander F. Tieman, 2008. "Quality of Financial Sector Regulation and Supervision Around the World," IMF Working Papers 08/190, International Monetary Fund.
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Cited by:
  1. G. de Cadenas-Santiago & L. de Mesa & A. Sanchís, 2010. "Systemic Risk, an Empirical Approach," Economic Reports 17-2010, FEDEA.

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