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Integrated financial supervision: Which model?

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  • Cihák, Martin
  • Podpiera, Richard

Abstract

Integrated agencies supervising banks, nonbank financial institutions, and securities markets have been gaining popularity around the globe. Using a unique data set on compliance with international standards in 84 countries, we find that greater supervisory integration is associated with higher quality of insurance and securities supervision and greater consistency of supervision across sectors. Within the different forms of integration, we find some support for the "twin peaks" model that integrates supervision across sectors but separates business conduct and prudential supervision. We also find that whether supervision is located inside or outside the central bank has no significant relation to supervisory quality.

Suggested Citation

  • Cihák, Martin & Podpiera, Richard, 2008. "Integrated financial supervision: Which model?," The North American Journal of Economics and Finance, Elsevier, vol. 19(2), pages 135-152, August.
  • Handle: RePEc:eee:ecofin:v:19:y:2008:i:2:p:135-152
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    References listed on IDEAS

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    1. Dirk Schoenmaker, 1992. "Institutional Separation between Supervisory and Monetary Agencies," FMG Special Papers sp52, Financial Markets Group.
    2. Barth,James R. & Caprio,Gerard & Levine,Ross, 2008. "Rethinking Bank Regulation," Cambridge Books, Cambridge University Press, number 9780521709309.
    3. Richard Podpiera, 2006. "Does Compliance with Basel Core Principles Bring Any Measurable Benefits?," IMF Staff Papers, Palgrave Macmillan, vol. 53(2), pages 1-5.
    4. 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.
    5. Jeffrey Carmichael & Alexander Fleming & David Llewellyn, 2004. "Aligning Financial Supervisory Structures with Country Needs," World Bank Publications, The World Bank, number 14876.
    6. 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.
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    Cited by:

    1. Gupta, Anshul & Akuzawa, Toshinao & Nishiyama, Yoshihiko, 2013. "Quantitative evaluation of contingent capital and its applications," The North American Journal of Economics and Finance, Elsevier, vol. 26(C), pages 457-486.
    2. Ovidiu Stoica & Delia-Elena Diaconasu, 2012. "Regional Economic Integration And National Financial Supervision. A Comparative Study," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(14), pages 1-23.
    3. Reza Siregar & Lim, C.S. Vincent, 2011. "Living with Macro-financial Linkages: Policy Perspectives and Challenges for SEACEN Countries," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp79, April.
    4. Martin Cihak & Wim Fonteyne, 2009. "Five Years After; European Union Membership and Macro-Financial Stability in the New Member States," IMF Working Papers 09/68, International Monetary Fund.
    5. Beladi, Hamid & Oladi, Reza & Tay, Nicholas S.P., 2012. "On competition for listings," Economics Letters, Elsevier, vol. 114(3), pages 315-318.
    6. Simona Elena IAGAR, 2015. "Implications Of Banking Supervision Across The European Monetary Union, A Sovereign Debt Crisis Update," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 7(2a), pages 479-488, September.
    7. Reza Siregar & Lim C.S. Vincent & Victor Pontines, 2011. "Post Global Financial Crisis: Issues and Challenges for Central Banks of Emerging Markets," Staff Papers, South East Asian Central Banks (SEACEN) Research and Training Centre, number sp80, April.
    8. Martin Čihák & Alexander Tieman, 2011. "Quality of Financial Sector Regulation and Supervision Around the World," Chapters,in: Handbook of Central Banking, Financial Regulation and Supervision, chapter 15 Edward Elgar Publishing.
    9. Ovidiu Stoica & Roxana Scantee, 2012. "Financial Supervision and Banking Competition in European Union," Acta Universitatis Danubius. OEconomica, Danubius University of Galati, issue 8(6), pages 56-66, December.
    10. 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.

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