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Exploring governance of the new European Banking AuthorityâA case for harmonization?

Author

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  • Masciandaro, Donato
  • Nieto, Maria J.
  • Quintyn, Marc

Abstract

In the context of the proposed EU financial supervisory reforms, this paper focuses on the governance of the network of national supervisory banking agencies and the newly established Community supervisor (European Banking Authority, EBA). We assess to what extent lack of governance convergence nationally and with EBA could undermine the incentives for cooperation among supervisors. Convergence should particularly focus on (i) the issue of the presence of politicians on decision-making bodies; (ii) the need for clearly defining dismissal procedures of heads of supervision; (iii) autonomy from government in regulatory matters; (iv) supervisory autonomy in matters of licensing and withdrawing licenses; (iv) mechanisms for judicial accountability; (v) legal protection for supervisors handling in good faith. In the absence of full centralization of prudential supervision, early harmonization of national governance arrangements towards best practice would better align supervisors' incentive structures and, hence, be beneficial for the effectiveness of European supervision.

Suggested Citation

  • Masciandaro, Donato & Nieto, Maria J. & Quintyn, Marc, 2011. "Exploring governance of the new European Banking AuthorityâA case for harmonization?," Journal of Financial Stability, Elsevier, vol. 7(4), pages 204-214, December.
  • Handle: RePEc:eee:finsta:v:7:y:2011:i:4:p:204-214
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    References listed on IDEAS

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    1. Donato Masciandaro & Maria Nieto & Marc Quintyn, 2009. "Financial supervision in the EU: is there convergence in the national architectures?," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 17(2), pages 86-95, May.
    2. Udaibir S Das & Marc G Quintyn, 2002. "Crisis Prevention and Crisis Management; The Role of Regulatory Governance," IMF Working Papers 02/163, International Monetary Fund.
    3. Marc Quintyn & Michael W. Taylor, 2003. "Regulatory and Supervisory Independence and Financial Stability," CESifo Economic Studies, CESifo, vol. 49(2), pages 259-294.
    4. Alicia Novoa & Steven A. Seelig, 2009. "Governance Practices At Financial Regulatory and Supervisory Agencies," IMF Working Papers 09/135, International Monetary Fund.
    5. Mayes, David G. & Nieto, María J. & Wall, Larry, 2008. "Multiple safety net regulators and agency problems in the EU: Is Prompt Corrective Action partly the solution?," Journal of Financial Stability, Elsevier, vol. 4(3), pages 232-257, September.
    6. María Nieto & Garry J. Schinasi, 2007. "EU Framework for Safeguarding Financial Stability; Towards an Analytical Benchmark for Assessing its Effectiveness," IMF Working Papers 07/260, International Monetary Fund.
    7. Oliver E. Williamson, 2000. "The New Institutional Economics: Taking Stock, Looking Ahead," Journal of Economic Literature, American Economic Association, vol. 38(3), pages 595-613, September.
    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. Michael W Taylor & Marc G Quintyn & Silvia Ramirez, 2007. "The Fear of Freedom; Politicians and the Independence and Accountability of Financial Sector Supervisors," IMF Working Papers 07/25, International Monetary Fund.
    10. 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.
    11. 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.
    12. Donato Masciandaro & Maria J. Nieto & Henriette Prast, 2007. "Who pays for banking supervision? Principles and trends," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 15(3), pages 303-326, July.
    13. Marc Quintyn, 2007. "Governance of Financial Supervisors and its Effects - a Stocktaking Exercise," SUERF Studies, SUERF - The European Money and Finance Forum, number 2007/4 edited by Morten Balling.
    14. Masciandaro, Donato & Quintyn, Marc, 2008. "Helping hand or grabbing hand?: Politicians, supervision regime, financial structure and market view," The North American Journal of Economics and Finance, Elsevier, vol. 19(2), pages 153-173, August.
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    Cited by:

    1. repec:eee:finana:v:53:y:2017:i:c:p:48-65 is not listed on IDEAS
    2. David T. Llewellyn, 2013. "A Strategic Approach to Post-Crisis Regulation - The Need for Pillar 4," Chapters,in: Stability of the Financial System, chapter 16 Edward Elgar Publishing.

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