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Is One Watchdog Better Than Three? International Experience with Integrated Financial Sector Supervision

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  • Mr. Martin Cihak
  • Richard Podpiera

Abstract

Over the past two decades, there has been a clear trend toward integrating the regulation and supervision of banks, nonbank financial institutions, and securities markets. This paper reviews the international experience with integrated supervision. We survey the theoretical arguments for and against the integrated supervisory model, and use data on compliance with international standards to assess the validity of some of these arguments. We find that (i) full integration is associated with higher quality of supervision in insurance and securities and greater consistency of supervision across sectors, after controlling for the level of development; and (ii) fully integrated supervision is not associated with a significant reduction in supervisory staff.

Suggested Citation

  • Mr. Martin Cihak & Richard Podpiera, 2006. "Is One Watchdog Better Than Three? International Experience with Integrated Financial Sector Supervision," IMF Working Papers 2006/057, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2006/057
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    References listed on IDEAS

    as
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    5. Mr. Udaibir S Das & Mr. Marc G Quintyn, 2002. "Crisis Prevention and Crisis Management: The Role of Regulatory Governance," IMF Working Papers 2002/163, International Monetary Fund.
    6. Richard Podpiera, 2006. "Does Compliance with Basel Core Principles Bring Any Measurable Benefits?," IMF Staff Papers, Palgrave Macmillan, vol. 53(2), pages 1-5.
    7. Mr. Richard K. Abrams & Mr. Michael W Taylor, 2000. "Issues in the Unification of Financial Sector Supervision," IMF Working Papers 2000/213, International Monetary Fund.
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    Full references (including those not matched with items on IDEAS)

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