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Convergence and Integration of Banking Sector Regulations in the Euro-Mediterranean area


  • Ayadi, Rym
  • Arbak, Emrah
  • De Groen, Willem Pieter


This analysis of regulatory convergence shows that substantial improvements have been made in the southern and eastern Mediterranean countries (SEMCs), yet they still suffer from key weaknesses in deposit insurance, entry obstacles, political interference and the strength of legal rights. In particular, deposit insurance systems in many SEMCs are not explicit, which could lead to uncertainties in the provision of support to banks in case of default. Moreover, most systems do not attempt to align the banks’ incentives in risk-taking with those of taxpayers by implementing risk-based premiums. Another persistent issue is the presence of entry obstacles, with signs of substantial barriers to entry and continued government ownership of banks. The comparison of regulatory systems also highlights that some SEMCs have barely been able to catch up with the strong increase in supervisory independence in EU Mediterranean countries in recent years. While creditor protection remains relatively weak, significant improvements in credit information have occurred since 2003, notably through the establishment of private credit bureaus with universal coverage.

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  • Ayadi, Rym & Arbak, Emrah & De Groen, Willem Pieter, 2013. "Convergence and Integration of Banking Sector Regulations in the Euro-Mediterranean area," CEPS Papers 7853, Centre for European Policy Studies.
  • Handle: RePEc:eps:cepswp:7853

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    References listed on IDEAS

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    6. Svetlana Andrianova & Panicos Demetriades & Anja Shortland, 2012. "Government Ownership of Banks, Institutions and Economic Growth," Economica, London School of Economics and Political Science, vol. 79(315), pages 449-469, July.
    7. Jappelli, Tullio & Pagano, Marco, 2002. "Information sharing, lending and defaults: Cross-country evidence," Journal of Banking & Finance, Elsevier, vol. 26(10), pages 2017-2045, October.
    8. Kane, Edward J., 2000. "Designing financial safety nets to fit country circumstances," Policy Research Working Paper Series 2453, The World Bank.
    9. Juan Sole & Gabriel Sensenbrenner & Amor Tahari & J. E. J. De Vrijer & Marina Moretti & Patricia D Brenner & Abdelhak S Senhadji, 2007. "Financial Sector Reforms and Prospects for Financial Integration in Maghreb Countries," IMF Working Papers 07/125, International Monetary Fund.
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    Cited by:

    1. Ayadi, Rym, 2013. "Financial Sector Development and Integration in the Southern and Eastern Mediterranean: Towards a long-term sustainable transition," CEPS Papers 7936, Centre for European Policy Studies.

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