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Institutions Matter: Financial Supervision Architecture, Central Bank and Path-Dependence. General Trends and the South Eastern European Countries

Author

Listed:
  • Donato Masciandaro

    (Department of Economics and Paolo Baffi Centre, Bocconi University)

  • Marc Quintyn

    (IMF Institute, International Monetary Fund, Washington)

Abstract

We propose a path-dependence approach to analyzing the evolution of the financial supervisory architecture, focusing on the institutional role of the central bank, and then apply our framework to describing the institutional settings in a selected sample of countries. The policymaker who decides to maintain or reform the supervisory architecture is influenced by the existing institutional setting in a systematic way: the more the central bank is actually involved in supervision, the less likely a more concentrated supervisory regime will emerge, and vice versa (path-dependence effect). We test the path-dependence effect describing and evaluating the evolution and the present state of the architecture of six national supervisory regimes in South Eastern Europe (SEE): Albania, Bulgaria, Greece, Romania, Serbia, and Turkey. The study of the SEE countries confirms the postulated role of the central bank in the institutional setting. In five cases the high involvement of the central bank in supervision is correlated with a multi-authority regime, while in one case a high degree of financial supervision unification is related with low central bank involvement.

Suggested Citation

  • Donato Masciandaro & Marc Quintyn, 2010. "Institutions Matter: Financial Supervision Architecture, Central Bank and Path-Dependence. General Trends and the South Eastern European Countries," South-Eastern Europe Journal of Economics, Association of Economic Universities of South and Eastern Europe and the Black Sea Region, vol. 8(1), pages 7-53.
    • Handle: RePEc:seb:journl:v:8:y:2010:i:1:p:7-53
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    Cited by:

    1. Dimitrios Sideris, 2011. "Optimum currency areas, structural changes and the endogeneity of the OCA criteria: evidence from six new EU member states," Applied Financial Economics, Taylor & Francis Journals, vol. 21(4), pages 195-206.
    2. Vasile Cocriş & Bogdan Căpraru, 2011. "Financial Supervision Structure In Romania. A Comparative Approach," Annales Universitatis Apulensis Series Oeconomica, Faculty of Sciences, "1 Decembrie 1918" University, Alba Iulia, vol. 2(13), pages 1-23.
    3. Mertzanis, Charilaos, 2020. "Financial supervision structure, decentralized decision-making and financing constraints," Journal of Economic Behavior & Organization, Elsevier, vol. 174(C), pages 13-37.

    More about this item

    Keywords

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    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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