IDEAS home Printed from https://ideas.repec.org/p/fip/fedlsp/2008-01.html
   My bibliography  Save this paper

The British tripartite financial supervision system in the face of the Northern Rock run

Author

Listed:
  • Sharon K. Blei

Abstract

The Northern Rock debacle - Britain's first bank run in 141 years - was the Tripartite regulatory system's first live ammunition test since its establishment in 1997. The aftermath of the crisis lists the destruction of Britain's fifth largest mortgage lender, the tarnishing of the Bank of England's well-established reputation, and the loss of confidence in the reformed regulatory system - a system that had been considered a paragon by policymakers and reformers around the world. As market observers, politicians, investors and bankers criticize not only the mortgage lender for its extreme business model - but also the Tripartite regulatory system for mishandling the crisis - it is important to piece the story together and draw lessons from it. This paper examines the Tripartite's management of the crisis and concludes that the separation between the roles of banking supervision and Lender of Last Resort, coupled by Britain's flawed deposit insurance scheme, account for the British regulatory system's mishandling of the funding shortage that escalated into a bank run.

Suggested Citation

  • Sharon K. Blei, 2008. "The British tripartite financial supervision system in the face of the Northern Rock run," Supervisory Policy Analysis Working Papers 2008-01, Federal Reserve Bank of St. Louis.
    • Handle: RePEc:fip:fedlsp:2008-01
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    References listed on IDEAS

    as
    1. Dirk Schoenmaker, 1992. "Institutional Separation between Supervisory and Monetary Agencies," FMG Special Papers sp52, Financial Markets Group.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sébastien Vivier-Lirimont, 2004. "Interbanking networks : towards a small financial world ?," Cahiers de la Maison des Sciences Economiques v04046, Université Panthéon-Sorbonne (Paris 1).
    2. Cihák, Martin & Podpiera, Richard, 2008. "Integrated financial supervision: Which model?," The North American Journal of Economics and Finance, Elsevier, vol. 19(2), pages 135-152, August.
    3. Georges Dionne, 2003. "The Foundationsof Banks' Risk Regulation: A Review of Literature," THEMA Working Papers 2003-46, THEMA (THéorie Economique, Modélisation et Applications), Université de Cergy-Pontoise.
    4. Friedrich Heinemann & Martin Schüler, 2004. "A Stiglerian View on Banking Supervision," Public Choice, Springer, vol. 121(1), pages 99-130, October.
    5. Donato Masciandaro, 1995. "Designing a central bank: Social player, monetary agent, or banking agent?," Open Economies Review, Springer, vol. 6(4), pages 399-410, October.
    6. Cordella, Tito & Yeyati, Eduardo Levy, 2003. "Bank bailouts: moral hazard vs. value effect," Journal of Financial Intermediation, Elsevier, vol. 12(4), pages 300-330, October.
    7. Heinemann, Friedrich & Schüler, Martin, 2002. "A Stigler View on Banking Supervision," ZEW Discussion Papers 02-66, ZEW - Leibniz Centre for European Economic Research.
    8. Pagès, H. & Santos, J., 2002. "Optimal Supervisory Policies and Depositor-Preferences Laws," Working papers 91, Banque de France.
    9. Martin Summer, 2003. "Banking Regulation and Systemic Risk," Open Economies Review, Springer, vol. 14(1), pages 43-70, January.
    10. Schüler, Martin, 2004. "Integrated Financial Supervision in Germany," ZEW Discussion Papers 04-35, ZEW - Leibniz Centre for European Economic Research.
    11. Rajkamal Iyer & José-Luis Peydró, 2011. "Interbank Contagion at Work: Evidence from a Natural Experiment," Review of Financial Studies, Society for Financial Studies, vol. 24(4), pages 1337-1377.
    12. Frisell, Lars & Roszbach, Kasper & spagnolo, giancarlo, 2008. "Governing the Governors: A Clinical Study of Central Banks," Working Paper Series 221, Sveriges Riksbank (Central Bank of Sweden).
    13. Xavier Freixas & Anthony M. Santomero, 2002. "An overall perspective on banking regulation," Working Papers 02-1, Federal Reserve Bank of Philadelphia.
    14. Luis Garicano & Rosa M. Lastra, 2010. "Towards a New Architecture for Financial Stability: Seven Principles," Journal of International Economic Law, Oxford University Press, vol. 13(3), pages 597-621, September.
    15. Giorgio Di Giorgio & Carmine Di Noia, 2001. "Financial Regulation and Supervision in the Euro Area: A Four-Peak Proposal," Center for Financial Institutions Working Papers 01-02, Wharton School Center for Financial Institutions, University of Pennsylvania.
    16. Richard S. Grossman, 2006. "The Emergence of Central Banks and Banking Regulation in Comparative Perspective," Wesleyan Economics Working Papers 2006-021, Wesleyan University, Department of Economics.
    17. Oğuz Esen & Ayla Oğuş Binatlı, 2013. "Minsky Perpective on the Macroprudential Policy," EY International Congress on Economics I (EYC2013), October 24-25, 2013, Ankara, Turkey 305, Ekonomik Yaklasim Association.
    18. Carmine Di Noia & Giorgio Di Giorgio, 1999. "Should Banking Supervision and Monetary Policy Tasks be Given to Different Agencies?," International Finance, Wiley Blackwell, vol. 2(3), pages 361-378, November.
    19. Nuno Cassola & Christoffer Kok & Francesco Paolo Mongelli, 2019. "The ECB after the crisis: existing synergies among monetary policy, macroprudential policies and banking supervision," Working Papers 424, University of Milano-Bicocca, Department of Economics, revised Dec 2019.
    20. Michele Fratianni, 2008. "Financial Crises, Safety Nets and Regulation," Rivista italiana degli economisti, Società editrice il Mulino, issue 2, pages 169-208.

    More about this item

    Keywords

    Banks and banking - Great Britain; Great Britain; Bank supervision;
    All these keywords.

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:fip:fedlsp:2008-01. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (). General contact details of provider: http://edirc.repec.org/data/frbslus.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.