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The Economics of Supranational Bank Supervision

Author

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  • Beck, Thorsten
  • Silva-Buston, Consuelo
  • Wagner, Wolf

Abstract

This article examines the effectiveness of cooperation among bank supervisors using novel data on supranational agreements signed by 93 countries. Exploiting that globally operating banks are differently covered by these agreements, we show that supervisory cooperation generally improves bank stability. The magnitude of the effect is higher for smaller global banks, and when supervisors are more stringent and have access to higher quality information. We also show that actual supervisory cooperation varies across countries consistent with differences in economic costs and benefits of cooperation. This suggests that cooperation is not always desirable, despite being effective in reducing bank risk.

Suggested Citation

  • Beck, Thorsten & Silva-Buston, Consuelo & Wagner, Wolf, 2023. "The Economics of Supranational Bank Supervision," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 58(1), pages 324-351, February.
    • Handle: RePEc:cup:jfinqa:v:58:y:2023:i:1:p:324-351_10
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    Cited by:

    1. Wagner, Wolf & Beck, Thorsten, 2020. "National containment policies and international cooperation," CEPR Discussion Papers 14668, Centre for Economic Policy Research.
    2. Koetter, Michael & Krause, Thomas & Sfrappini, Eleonora & Tonzer, Lena, 2022. "Completing the European Banking Union: Capital cost consequences for credit providers and corporate borrowers," European Economic Review, Elsevier, vol. 148(C).
    3. Loranth, Gyongyi & Segura, Anatoli & Zeng, Jing, 2022. "Voluntary Support and Ring-Fencing in Cross-border Banks," Working Paper Series 2688, European Central Bank.
    4. Gropp, Reint & Mosk, Thomas & Ongena, Steven & Simac, Ines & Wix, Carlo, 2024. "Supranational Rules, National Discretion: Increasing Versus Inflating Regulatory Bank Capital?," Journal of Financial and Quantitative Analysis, Cambridge University Press, vol. 59(2), pages 830-862, March.
    5. Bank for International Settlements, 2025. "Lessons on supervisory effectiveness - a literature review," BCBS Working Papers 45, Bank for International Settlements.
    6. Michael Abendschein & Harry Gölz, 2021. "International cooperation on financial market regulation," International Economics and Economic Policy, Springer, vol. 18(4), pages 787-824, October.
    7. Schmidt, Kirsten & Tonzer, Lena, 2024. "Banks' foreign homes," Discussion Papers 46/2024, Deutsche Bundesbank.
    8. Hans Degryse & Cédric Huylebroek & Bernardus F Nazar Van Doornik, 2025. "The disciplining effect of bank supervision: evidence from SupTech," BIS Working Papers 1256, Bank for International Settlements.
    9. Michael Holmes Jr., R. & Xu, Kai & Hitt, Michael A., 2025. "Political institutions, the institutional milieu, and inward foreign direct investment," Journal of Business Research, Elsevier, vol. 197(C).
    10. Beck, Thorsten & Silva-Buston, Consuelo & Wagner, Wolf, 2025. "Supervisory arbitrage and real effects," Journal of Corporate Finance, Elsevier, vol. 95(C).

    More about this item

    JEL classification:

    • G1 - Financial Economics - - General Financial Markets
    • G2 - Financial Economics - - Financial Institutions and Services

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