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WHAT DETERMINES THE "LEGAL" QUALITY Of BANK REGULATION AND SUPERVISION?

Author

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  • NERGIZ DINCER
  • BILIN NEYAPTI

Abstract

"This article has two contributions. First, using the methodology of Neyapti and Dincer, it provides measures of legal quality of bank regulation and supervision (RS) for a new set of developed and less-developed countries. Second, it investigates the determinants of RS in view of the hypothesis that the existing institutional environment matters for the quality of formal institutions such as banking laws. The empirical evidence in this article demonstrates that past financial crises and prevailing levels of both financial market development and foreign direct investment inflows affect RS beyond and above the effects of other potential factors, such as macroeconomic performance and good governance. Evidence from transition economies also supports these findings. "("JEL "E44, G2, K29, O1) Copyright (c) 2008 Western Economic Association International.

Suggested Citation

  • Nergiz Dincer & Bilin Neyapti, 2008. "WHAT DETERMINES THE "LEGAL" QUALITY Of BANK REGULATION AND SUPERVISION?," Contemporary Economic Policy, Western Economic Association International, vol. 26(4), pages 607-622, October.
  • Handle: RePEc:bla:coecpo:v:26:y:2008:i:4:p:607-622
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    References listed on IDEAS

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    1. Bilin Neyapti & Nergiz Dincer, 2005. "Measuring the Quality of Bank Regulation and Supervision with an Application to Transition Economies," Economic Inquiry, Western Economic Association International, vol. 43(1), pages 79-99, January.
    2. Barth, James R. & Caprio, Gerard Jr. & Levine, Ross, 2004. "Bank regulation and supervision: what works best?," Journal of Financial Intermediation, Elsevier, vol. 13(2), pages 205-248, April.
    3. Cukierman, Alex & Miller, Geoffrey P. & Neyapti, Bilin, 2002. "Central bank reform, liberalization and inflation in transition economies--an international perspective," Journal of Monetary Economics, Elsevier, vol. 49(2), pages 237-264, March.
    4. Kaufmann, Daniel & Kraay, Aart & Zoido-Lobaton, Pablo, 2002. "Governance matters II - updated indicators for 2000-01," Policy Research Working Paper Series 2772, The World Bank.
    5. Demirguc-Kunt, Asli & Huizinga, Harry, 2004. "Market discipline and deposit insurance," Journal of Monetary Economics, Elsevier, vol. 51(2), pages 375-399, March.
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    Citations

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    Cited by:

    1. Buck, Florian & Schliephake, Eva, 2013. "The regulator’s trade-off: Bank supervision vs. minimum capital," Journal of Banking & Finance, Elsevier, vol. 37(11), pages 4584-4598.
    2. Delis, Manthos D & Staikouras, Panagiotis, 2009. "On-site audits, sanctions, and bank risk-taking: An empirical overture towards a novel regulatory and supervisory philosophy," MPRA Paper 16836, University Library of Munich, Germany.

    More about this item

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G2 - Financial Economics - - Financial Institutions and Services
    • K29 - Law and Economics - - Regulation and Business Law - - - Other
    • O1 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development

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