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The Economic Crisis

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Author Info

  • Marc Quintyn
  • Rosaria Vega Pansini
  • Donato Masciandaro

Abstract

The Asian financial crisis marked the beginning of worldwide efforts to improve the effectiveness of financial supervision. However, the crisis that started in 2007?08 was a crude awakening: several of these improvements seemed unable to avoid or mitigate the crisis. This paper brings the first systematic analysis of the role of two of these efforts - modifications in the architecture of financial supervision and in supervisory governance - and concludes that they were negatively correlated with economic resilience. Using the emerging distinction between macro- and micro-prudential supervision, we explore to what extent two separate institutions would allow for more checks and balances to improve supervisory governance and, thus, reduce the probability of supervisory failure.

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Bibliographic Info

Paper provided by International Monetary Fund in its series IMF Working Papers with number 11/261.

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Length: 47
Date of creation: 01 Nov 2011
Date of revision:
Handle: RePEc:imf:imfwpa:11/261

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Related research

Keywords: Asia; Bank supervision; Banks; Central bank role; Financial sector; banking; bank involvement; financial structure; deposit money; financial system; banking supervision; financial stability; financial institutions; deposit money banks; financial regulation; financial liberalization; banking regulation; bank soundness; financial markets; banking industry; bank credit; bank assets; liquid liabilities; net interest margin; moral hazard; bank claims; financial systems; banking system; bank deposits; financial services; central banking; bank of england; financial deregulation; bank policy; financial innovation; banking crises; deposit insurance; money markets; banking regulations; banks assets; banking sector; financial repression; reserve requirements; financial market; financial reforms; financial conglomerates; bank performance; consolidated supervision; macroeconomic stability; interest rate controls; financial statements; subordinated debt; bank supervisor; bank supervisors; bank for international settlements; bank structure; bank activities; banking crisis; financial policies; systemic banking crises; financial economics;

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References

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  1. Thorsten Beck & Asli Demirguc-Kunt & Ross Levine, 2003. "Bank Supervision and Corporate Finance," NBER Working Papers 9620, National Bureau of Economic Research, Inc.
  2. Rose, Andrew K. & Spiegel, Mark M., 2011. "Cross-country causes and consequences of the crisis: An update," European Economic Review, Elsevier, Elsevier, vol. 55(3), pages 309-324, April.
  3. Boyer, Pierre C. & Ponce, Jorge, 2012. "Regulatory capture and banking supervision reform," Journal of Financial Stability, Elsevier, Elsevier, vol. 8(3), pages 206-217.
  4. Richard Podpiera, 2004. "Does Compliance with Basel Core Principles Bring Any Measurable Benefits?," IMF Working Papers 04/204, International Monetary Fund.
  5. Romain Ranciere & Aaron Tornell & Frank Westermann, 2005. "Systemic Crises and Growth," CESifo Working Paper Series 1451, CESifo Group Munich.
  6. Laffont, Jean-Jacques & Martimort, David, 1994. "Separation of Regulators against Collusive Behavior," IDEI Working Papers, Institut d'Économie Industrielle (IDEI), Toulouse 44, Institut d'Économie Industrielle (IDEI), Toulouse.
  7. Marc Quintyn, 2007. "Governance of Financial Supervisors and its Effects - a Stocktaking Exercise," SUERF Studies, SUERF - The European Money and Finance Forum, SUERF - The European Money and Finance Forum, number 2007/4 edited by Morten Balling, July.
  8. Domenico Giannone & Michèle Lenza & Lucrezia Reichlin, 2010. "Market Freedom and the Global Recession," Working Papers ECARES, ULB -- Universite Libre de Bruxelles ECARES 2010-020, ULB -- Universite Libre de Bruxelles.
  9. Augusto de la Torre & Alain Ize, 2010. "Regulatory Reform: Integrating Paradigms," International Finance, Wiley Blackwell, Wiley Blackwell, vol. 13(1), pages 109-139, 03.
  10. Reinhart, Carmen & Felton, Andrew, 2008. "The First Global Financial Crisis of the 21st Century," MPRA Paper 11862, University Library of Munich, Germany.
  11. Stephen G. Cecchetti & Marion Kohler & Christian Upper, 2009. "Financial Crises and Economic Activity," NBER Working Papers 15379, National Bureau of Economic Research, Inc.
  12. Masciandaro, Donato & Quintyn, Marc & Taylor, Michael W., 2008. "Inside and outside the central bank: Independence and accountability in financial supervision: Trends and determinants," European Journal of Political Economy, Elsevier, Elsevier, vol. 24(4), pages 833-848, December.
  13. Stijn Claessens & Luc Laeven & Deniz Igan & Giovanni Dell'Ariccia, 2010. "Lessons and Policy Implications From the Global Financial Crisis," IMF Working Papers 10/44, International Monetary Fund.
  14. Caprio, Gerard Jr. & D'Apice, Vincenzo & Ferri, Giovanni & Puopolo, Giovanni Walter, 2010. "Macro Financial Determinants of the Great Financial Crisis: Implications for Financial Regulation," MPRA Paper 26088, University Library of Munich, Germany.
  15. Alessandro Gambini & Salim M. Darbar & Marco Arnone, 2007. "Banking Supervision," IMF Working Papers 07/82, International Monetary Fund.
  16. Enrico Berkes & Ugo Panizza & Jean-Louis Arcand, 2012. "Too Much Finance?," IMF Working Papers 12/161, International Monetary Fund.
  17. Michael Taylor & Marc Quintyn, 2002. "Regulatory and Supervisory Independence and Financial Stability," IMF Working Papers 02/46, International Monetary Fund.
  18. Udaibir S. Das & Marc Quintyn, 2002. "Crisis Prevention and Crisis Management," IMF Working Papers 02/163, International Monetary Fund.
  19. Jorge Ponce, 2010. "A Normative Analysis of Banking Supervision: Independence, Legal Protection and Accountability," Money Affairs, Centro de Estudios Monetarios Latinoamericanos, Centro de Estudios Monetarios Latinoamericanos, vol. 0(2), pages 141-181, July-Dece.
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Citations

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Cited by:
  1. Dermot Hodson, 2013. "The Eurozone in 2012: ‘Whatever It Takes to Preserve the Euro'?," Journal of Common Market Studies, Wiley Blackwell, Wiley Blackwell, vol. 51, pages 183-200, 09.
  2. Paul Cavelaars & Jakob de Haan & Paul Hilbers & Bart Stellinga, 2013. "Challenges for financial sector supervision," DNB Occasional Studies, Netherlands Central Bank, Research Department 1106, Netherlands Central Bank, Research Department.
  3. Hagen, Tobias, 2013. "Impact of national financial regulation on macroeconomic and fiscal performance after the 2007 financial shock: Econometric analyses based on cross-country data," Economics Discussion Papers 2013-26, Kiel Institute for the World Economy.
  4. Emmanuel Carré & Jézabel Couppey-Soubeyran & Dominique Plihon & Marc Pourroy, 2013. "Central Banking after the Crisis: Brave New World or Back to the Future? Replies to a questionnaire sent to central bankers and economists," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00881344, HAL.
  5. Hagen, Tobias, 2013. "Impact of national financial regulation on macroeconomic and fiscal performance after the 2007 financial stock: Econometric analyses based on cross-country data," Working Paper Series: Business and Law 02, Frankfurt University of Applied Sciences, Faculty of Business and Law.
  6. Cihak, Martin & Demirguc-Kunt, Asli, 2013. "Rethinking the state's role in finance," Policy Research Working Paper Series 6400, The World Bank.
  7. Cihak, Martin & Demirguc-Kunt, Asli & Johnston, R. Barry, 2013. "Incentive audits : a new approach to financial regulation," Policy Research Working Paper Series 6308, The World Bank.
  8. Zenathan Hasannudin, 2012. "The structure of bank supervision and corruption in lending: a study for transition economies," Post-Print, HAL dumas-00802139, HAL.
  9. Dalla Pellegrina, L. & Masciandaro, D. & Pansini, R.V., 2013. "The central banker as prudential supervisor: Does independence matter?," Journal of Financial Stability, Elsevier, Elsevier, vol. 9(3), pages 415-427.
  10. Cheng Hoon Lim & Ivo Krznar & Fabian Lipinsky & Akira Otani & Xiaoyong Wu, 2013. "The Macroprudential Framework," IMF Working Papers 13/166, International Monetary Fund.
  11. Golovnin, M., 2013. "Creation of a Financial Mega-Regulator, and Modern Approaches to the Monetary Policy," Journal of the New Economic Association, New Economic Association, New Economic Association, vol. 19(3), pages 149-153.
  12. Emmanuel Carré & Jézabel Couppey-Soubeyran & Dominique Plihon & Marc Pourroy, 2013. "Central Banking after the Crisis: Brave New World or Back to the Future?," Documents de travail du Centre d'Economie de la Sorbonne, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne 13073, Université Panthéon-Sorbonne (Paris 1), Centre d'Economie de la Sorbonne.

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