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Is One Watchdog Better than Three? International Experience with Integrated Financial-Sector Supervision (in English)

Author

Listed:
  • Martin Èihák

    () (International Monetary Fund, Washington, D.C.)

  • Richard Podpiera

    () (International Monetary Fund, Washington, D.C.)

Abstract

Over the past two decades, there has been a clear trend toward integrating the regulation and supervision of banks, nonbank financial institutions, and securities markets. This paper reviews the international experience with integrated supervision. The authors survey the theoretical arguments for and against the integrated supervisory model, and use data on compliance with international standards to assess the validity of some of these arguments. The find that (i) integration is associated with a higher quality of supervision in insurance and securities and a higher consistency of supervision across sectors, after controlling for level of development; and (ii) integrated supervision is not associated with a significant reduction in supervisory staff.

Suggested Citation

  • Martin Èihák & Richard Podpiera, 2006. "Is One Watchdog Better than Three? International Experience with Integrated Financial-Sector Supervision (in English)," Czech Journal of Economics and Finance (Finance a uver), Charles University Prague, Faculty of Social Sciences, vol. 56(3-4), pages 102-126, March.
  • Handle: RePEc:fau:fauart:v:56:y:2006:i:3-4:p:102-126
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    File URL: http://journal.fsv.cuni.cz/storage/1048_s_102_126.pdf
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    References listed on IDEAS

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    Citations

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    Cited by:

    1. Melanie S. Milo, 2007. "Integrated Financial Supervision : An Institutional Perspective for the Philippines," Finance Working Papers 22667, East Asian Bureau of Economic Research.
    2. Kenneth Sullivan, 2008. "Presentación proactiva del desempeño," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 130-135, Julio-sep.
    3. Kawai, Masahiro & Pomerleano, Michael, 2010. "Regulating Systemic Risk," ADBI Working Papers 189, Asian Development Bank Institute.
    4. Jeżowski Mirosław, 2015. "Design and Factors Affecting State Supervision of the Financial Market," Management and Business Administration. Central Europe, De Gruyter Open, vol. 23(1), pages 113-129, March.
    5. Bartosz Godziszewski & Michal Kruszka, 2013. "Stability of Banking System in Poland and Activity of the KNF - Polish Financial Supervision Authority," CESifo Forum, Ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 14(1), pages 29-34, May.
    6. 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.
    7. Estrada, Dairo Ayiber & Gutiérrez R., Javier, 2009. "Supervisión y regulación del sistema financiero: modelos, implicaciones y alcances," PERFIL DE COYUNTURA ECONÓMICA, UNIVERSIDAD DE ANTIOQUIA - CIE, August.
    8. Petr Musílek, 2006. "Comparison Models of the Financial Regulation and Supervision: Advantages and Disadvantages," Český finanční a účetní časopis, University of Economics, Prague, vol. 2006(4), pages 8-22.
    9. Buklemishev, O. & Danilov, Yu., 2013. "Effective Financial Regulation and Creation of the Mega-Regulator in Russia," Journal of the New Economic Association, New Economic Association, vol. 19(3), pages 82-98.
    10. Milo, Melanie S., 2007. "Integrated Financial Supervision: an Institutional Perspective for the Philippines," Discussion Papers DP 2007-17, Philippine Institute for Development Studies.
    11. Petr Musílek, 2008. "Institutional Arrangement of Financial Markets Supervision: The Case of the Czech Republic," European Financial and Accounting Journal, University of Economics, Prague, vol. 2008(4), pages 6-21.
    12. Francesc Trillas Jané, 2016. "Behavioral Regulatory Agencies," Working Papers wpdea1606, Department of Applied Economics at Universitat Autonoma of Barcelona.
    13. Folarin Akinbami & Franklin N Ngwu, 2016. "Overhauling the institutional structure of financial regulation in Nigeria: The unfinished reform," Journal of Banking Regulation, Palgrave Macmillan, vol. 17(4), pages 311-331, November.
    14. Jenny Corbett, 2007. "Financial Institutions and Structures for Growth in East Asia," EABER Working Papers 21858, East Asian Bureau of Economic Research.
    15. Monkiewicz Jan, 2009. "Enterprise Management and Regulation of Economic Activity: The Case of Insurance," Foundations of Management, De Gruyter Open, vol. 1(2), pages 129-142, January.
    16. Pasali, Selahattin Selsah, 2013. "Where is the cheese ? synthesizing a giant literature on causes and consequences of financial sector development," Policy Research Working Paper Series 6655, The World Bank.
    17. Masahiro Kawai & Michael Pomerleano, 2012. "Strengthening Systemic Financial Regulation," Chapters,in: Implications of the Global Financial Crisis for Financial Reform and Regulation in Asia, chapter 2 Edward Elgar Publishing.
    18. International Monetary Fund, 2007. "Israel; Selected Issues," IMF Staff Country Reports 07/25, International Monetary Fund.
    19. Banco Central Europeo, 2008. "La titulización en la zona del euro," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(3), pages 136-149, Julio-sep.
    20. Aledjandro Lopez Mejia & Suliman Aljabrin & Rachid Awad & Mohamed Norat & In W Song, 2014. "Regulation and Supervision of Islamic Banks," IMF Working Papers 14/219, International Monetary Fund.
    21. Anthony Wood & Kimarie Clement, 2015. "A Review of the Financial Regulatory Framework of Barbados," Monetaria, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 111-145, january-j.

    More about this item

    Keywords

    financial sector; financial-services regulation; integrated supervision; prudential supervision; supervisory agencies;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • K20 - Law and Economics - - Regulation and Business Law - - - General
    • L50 - Industrial Organization - - Regulation and Industrial Policy - - - General

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