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Differences in bank regulations: the role of governance and corruption


  • Ayse Evrensel


This paper provides a detailed explanation of cross-country differences in bank regulations and their sources. The results suggest that the patterns of bank regulations imply important differences between developed and developing countries. While developing countries have stricter banking regulations, they are more likely to reduce competition among banks and provide greater safety nets to existing banks. The choice of banking regulations is affected by countries' political characteristics, which are in turn endogenous to countries' historical experiences and cultural characteristics. When political characteristics are replaced by corruption control, less corruption leads to less denied entries and banking restrictions as well as more constrained deposit insurance schemes. This implies that bank regulations may not be easy to change.

Suggested Citation

  • Ayse Evrensel, 2009. "Differences in bank regulations: the role of governance and corruption," Journal of Economic Policy Reform, Taylor & Francis Journals, vol. 12(2), pages 91-110.
  • Handle: RePEc:taf:jpolrf:v:12:y:2009:i:2:p:91-110 DOI: 10.1080/17487870902872870

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    References listed on IDEAS

    1. Gustavo Yamada, 2006. "Retornos a la educación superior en el mercado laboral: ¿Vale la pena el esfuerzo?," Working Papers 06-13, Centro de Investigación, Universidad del Pacífico.
    2. Barro, Robert J & Lee, Jong-Wha, 2001. "International Data on Educational Attainment: Updates and Implications," Oxford Economic Papers, Oxford University Press, vol. 53(3), pages 541-563, July.
    3. Francois Bourguignon & Francisco H.G. Ferreira & Nora Lustig, 2005. "The Microeconomics of Income Distribution Dynamics in East Asia and Latin America," World Bank Publications, The World Bank, number 14844.
    4. Gustavo Yamada & Juan Francisco Castro, 2007. "Poverty, inequality, and social policies in Peru: As poor as it gets," Working Papers 07-06, Centro de Investigación, Universidad del Pacífico.
    5. Juan F. Castro & Gustavo Yamada, 2006. "Evaluación de estrategias de desarrollo para alcanzar los objetivos del milenio en América Latina," Working Papers 06-11, Centro de Investigación, Universidad del Pacífico.
    6. Lucas, Robert Jr., 1988. "On the mechanics of economic development," Journal of Monetary Economics, Elsevier, vol. 22(1), pages 3-42, July.
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    Cited by:

    1. Christian E. Weller & Ghazal Zulfiqar, 2013. "Financial Market Diversity and Macroeconomic Stability," Working Papers wp332, Political Economy Research Institute, University of Massachusetts at Amherst.

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    bank regulations; bank supervision; corruption;


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