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International survey of integrated financial sector supervision

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  • de Luna Martinez, Jose
  • Rose, Thomas A.

Abstract

Despite the intense debate on the advantages and disadvantages of adopting integrated supervision that has taken place in recent years, little is known about the experiences of countries that have adopted it and the obstacles and challenges they have faced to implement it. In an attempt to shed light on this area, the authors present the results of a survey conducted in a group of 15 countries that have adopted integrated supervision. After a brief review of the literature on integrated supervision, the authors examine four topics: 1) The reasons cited by this group of countries for establishing an integrated supervisory agency. 2) The scope of regulatory and supervisory powers of these agencies. 3) The progress of these agencies in harmonizing their regulatory and supervisory practices across the intermediaries they supervise. 4) The practical problems faced by policymakers in adopting integrated supervision. The survey revealed that the group of integrated supervisory agencies is not as homogeneous as it seems. Important differences arise with regard to the scope of regulatory and supervisory powers the agencies have been given. In fact, contrary to popular belief, less than 50 percent of the agencies can be categorized as mega-supervisors. Another finding is that in most countries progress toward the harmonization of prudential regulation andsupervision across financial intermediaries remains limited. Interestingly, the survey revealed that practically all countries believe they have achieved a higher degree of harmonization in the regulation and supervision of banks and securities companies than between banks and insurance firms. The survey also identified some practical problems faced by this group of countries in establishing their unified supervisory agencies. The authors discuss these problems, along with the practical lessons and recommendations provided by the 15 agencies to other countries considering integrated supervision, in the final section of the paper.

Suggested Citation

  • de Luna Martinez, Jose & Rose, Thomas A., 2003. "International survey of integrated financial sector supervision," Policy Research Working Paper Series 3096, The World Bank.
  • Handle: RePEc:wbk:wbrwps:3096
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    References listed on IDEAS

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    1. Richard K. Abrams & Michael W Taylor, 2000. "Issues in the Unification of Financial Sector Supervision," IMF Working Papers 00/213, International Monetary Fund.
    2. Ronald MacDonald, 1998. "Consolidated Supervision of Banks," Handbooks, Centre for Central Banking Studies, Bank of England, number 15.
    3. Barth, James R. & Caprio, Gerard Jr. & Levine, Ross, 2004. "Bank regulation and supervision: what works best?," Journal of Financial Intermediation, Elsevier, vol. 13(2), pages 205-248, April.
    4. Taylor, Michael & Fleming, Alex, 1999. "Integrated financial supervision : lessons of Northern European experience," Policy Research Working Paper Series 2223, The World Bank.
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    Citations

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    Cited by:

    1. Vashishtha, Ashutosh & Sharma, Anil K., 2012. "Indian financial market regulation: A dialectic model," Journal of Economics and Business, Elsevier, vol. 64(1), pages 77-89.
    2. Alan D. Morrison, 2010. "Knowledge Codification, Institutions And Financial Markets," Manchester School, University of Manchester, vol. 78(s1), pages 1-24, September.
    3. Edgardo Demaestri & Gustavo Ferro, 2015. "The Debate on Integrated Financial Supervision: What is New?," Ensayos Económicos, Central Bank of Argentina, Economic Research Department, vol. 1(72), pages 27-58, June.
    4. Masciandaro, Donato, 2007. "Divide et impera: Financial supervision unification and central bank fragmentation effect," European Journal of Political Economy, Elsevier, vol. 23(2), pages 285-315, June.
    5. Stephanou, Constantinos, 2005. "Supervision of financial conglomerates : the case of Chile," Policy Research Working Paper Series 3553, The World Bank.
    6. Marie-Renée Bakker & Alexandra Gross, 2004. "Development of Non-bank Financial Institutions and Capital Markets in European Union Accession Countries," World Bank Publications, The World Bank, number 15030.
    7. Sabrina Pellerin & John R. Walter & Patricia E. Wescott, 2009. "The consolidation of financial market regulation : pros, cons, and implications for the United States," Working Paper 09-08, Federal Reserve Bank of Richmond.
    8. Schüler, Martin, 2004. "Integrated Financial Supervision in Germany," ZEW Discussion Papers 04-35, ZEW - Zentrum für Europäische Wirtschaftsforschung / Center for European Economic Research.
    9. Masciandaro, Donato & Quintyn, Marc, 2008. "Helping hand or grabbing hand?: Politicians, supervision regime, financial structure and market view," The North American Journal of Economics and Finance, Elsevier, vol. 19(2), pages 153-173, August.
    10. Holopainen, Helena, 2007. "Integration of financial supervision," Research Discussion Papers 12/2007, Bank of Finland.
    11. Jeffrey Carmichael & Alexander Fleming & David Llewellyn, 2004. "Aligning Financial Supervisory Structures with Country Needs," World Bank Publications, The World Bank, number 14876.
    12. Masciandaro, Donato, 2009. "Politicians and financial supervision unification outside the central bank: Why do they do it?," Journal of Financial Stability, Elsevier, vol. 5(2), pages 124-146, June.
    13. Donato Masciandaro, 2006. "E Pluribus Unum? Authorities' Design in Financial Supervision: Trends and Determinants," Open Economies Review, Springer, vol. 17(1), pages 73-102, January.
    14. Donato Masciandaro & Marc Quintyn, 2013. "The Evolution of Financial Supervision: the Continuing Search for the Holy Grail," SUERF 50th Anniversary Volume Chapters, SUERF - The European Money and Finance Forum.
    15. Melecky, Martin & Podpiera, Anca Maria, 2013. "Institutional structures of financial sector supervision, their drivers and historical benchmarks," Journal of Financial Stability, Elsevier, vol. 9(3), pages 428-444.

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