Institutional structures of financial sector supervision, their drivers and emerging benchmark models
AbstractThis paper studies the development of institutional structures for prudential and business conduct supervision of financial services over the past decade for 98 high and middle income countries. It identifies possible drivers of changes in these supervisory structures using a panel ordered probit analysis. The results show that (i) countries advancing to a higher stage of economic development tend to integrate their financial sector supervisory structure. Similarly, improvements in overall public governance drive countries to adopting more integrated supervisory arrangements. (ii) Greater independence of the central bank could entail less integration of prudential supervision, but not necessarily of business conduct. (iii) Small open economies opt for more integrated structures of financial sector supervision, especially on the prudential side. (iv) Financial deepening makes countries integrate supervision progressively more, however, greater development of the non-bank financial system including capital markets and the insurance industry makes countries opt for less integrated prudential supervision but not business conduct supervision structures. (v) The lobbying power of concentrated and highly profitable banking sectors acts as a significant negative force against business conduct integration. (vi) Countries with banking sectors that have been more exposed to aggregate liquidity risk, due to their high share of external funding, tend to integrate more their prudential supervision. Finally, (vii) a country that has experienced past financial crises is more likely to integrate its supervisory structure for financial services.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoPaper provided by University Library of Munich, Germany in its series MPRA Paper with number 37059.
Date of creation: 01 Mar 2012
Date of revision:
Integrated Supervision; Prudential and Business Conduct Supervision; Financial Services; International Experience; Panel Data Analysis; Ordered Probit;
Find related papers by JEL classification:
- G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
- E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
- G20 - Financial Economics - - Financial Institutions and Services - - - General
This paper has been announced in the following NEP Reports:
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Masciandaro, Donato, 2007. "Divide et impera: Financial supervision unification and central bank fragmentation effect," European Journal of Political Economy, Elsevier, vol. 23(2), pages 285-315, June.
- Marc Quintyn & Donato Masciandaro, 2008. "Helping Hand or Grabbing Hand? Supervisory Architecture, Financial Structure and Market View," IMF Working Papers 08/47, International Monetary Fund.
- Fabian Valencia & Luc Laeven, 2008. "Systemic Banking Crises: A New Database," IMF Working Papers 08/224, International Monetary Fund.
- 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, vol. 24(4), pages 833-848, December.
- Masciandaro, Donato, 2009. "Politicians and financial supervision unification outside the central bank: Why do they do it?," Journal of Financial Stability, Elsevier, vol. 5(2), pages 124-146, June.
- Donato Masciandaro, 2006. "E Pluribus Unum? Authorities' Design in Financial Supervision: Trends and Determinants," Open Economies Review, Springer, vol. 17(1), pages 73-102, January.
- Bernard Laurens & Martin Sommer & Marco Arnone & Jean-FranÃ§ois Segalotto, 2007.
"Central Bank Autonomy: Lessons from Global Trends,"
IMF Working Papers
07/88, International Monetary Fund.
- Buncic, Daniel & Melecky, Martin, 2013.
"Equilibrium credit : the reference point for macroprudential supervisors,"
Policy Research Working Paper Series
6358, The World Bank.
- Buncic, Daniel & Melecky, Martin, 2014. "Equilibrium credit: The reference point for macroprudential supervisors," Journal of Banking & Finance, Elsevier, vol. 41(C), pages 135-154.
- Buncic, Daniel & Martin Melecky, 2013. "Equilibrium Credit: The Reference Point for Macroprudential Supervisors," Economics Working Paper Series 1301, University of St. Gallen, School of Economics and Political Science.
- 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.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Ekkehart Schlicht).
If references are entirely missing, you can add them using this form.