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Quality of Financial Sector Regulation and Supervision Around the World

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  • Mr. Martin Cihak
  • Alexander F. Tieman

Abstract

The paper analyzes the quality of financial sector regulation and supervision around the globe. Unlike studies that collect and analyze data on regulation and supervision "on the books," this study also analyzes available information on supervisory implementation, making use of data from IMF-World Bank assessments of compliance with international standards and codes. Incorporating supervisory implementation into the study provides an improved means of assessing countries' regulatory systems. We find that countries' regulatory frameworks score on average one notch below full compliance with the standards (on a 4-notch scale). There are substantial differences in the quality of regulatory and supervisory frameworks across countries, with the income level being a major factor.

Suggested Citation

  • Mr. Martin Cihak & Alexander F. Tieman, 2008. "Quality of Financial Sector Regulation and Supervision Around the World," IMF Working Papers 2008/190, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2008/190
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    References listed on IDEAS

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    Cited by:

    1. Albuquerque, Pedro H. & Rajhi, Wassim, 2019. "Banking stability, natural disasters, and state fragility: Panel VAR evidence from developing countries," Research in International Business and Finance, Elsevier, vol. 50(C), pages 430-443.
    2. Nedelchev, Miroslav, 2010. "Корпоративно Управление На Финансови Групи (Спазвай И Обяснявай) [Corporate Governance of Financial Groups (Comply and Explain)]," MPRA Paper 52249, University Library of Munich, Germany.
    3. Shahchera , Mahshid & Jouzdani , Nasim, 2012. "The Impact of Regulation on Soundness of Banking: A Panel Data Approach," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 6(2), pages 191-209, December.
    4. Ayadi, Rym & Naceur, Sami Ben & Casu, Barbara & Quinn, Barry, 2016. "Does Basel compliance matter for bank performance?," Journal of Financial Stability, Elsevier, vol. 23(C), pages 15-32.
    5. Demirgüç-Kunt, Asli & Detragiache, Enrica, 2011. "Basel Core Principles and bank soundness: Does compliance matter?," Journal of Financial Stability, Elsevier, vol. 7(4), pages 179-190, December.
    6. repec:spo:wpmain:info:hdl:2441/293qice3lj861rvos9ns14n0h0 is not listed on IDEAS
    7. Donato Masciandaro & Maria J. Nieto & Marc Quintyn, 2011. "Will They Sing the Same Tune? Measuring Convergence in the New European System of Financial Supervisors," Chapters, in: Sylvester Eijffinger & Donato Masciandaro (ed.), Handbook of Central Banking, Financial Regulation and Supervision, chapter 17, Edward Elgar Publishing.
    8. repec:hal:spmain:info:hdl:2441/293qice3lj861rvos9ns14n0h0 is not listed on IDEAS
    9. Monkiewicz Jan, 2009. "Enterprise Management and Regulation of Economic Activity: The Case of Insurance," Foundations of Management, Sciendo, vol. 1(2), pages 129-142, January.
    10. Yves Mersch, 2013. "Default of Systemically Important Financial Intermediaries: Short-Term Stability vs. Incentive Compatability," Chapters, in: Andreas Dombret & Otto Lucius (ed.), Stability of the Financial System, chapter 11, Edward Elgar Publishing.
    11. Mr. Tigran Poghosyan & Mr. Martin Cihak, 2009. "Distress in European Banks: An Analysis Basedon a New Dataset," IMF Working Papers 2009/009, International Monetary Fund.
    12. Cihak, Martin & Demirguc-Kunt, Asli & Johnston, R. Barry, 2013. "Incentive audits : a new approach to financial regulation," Policy Research Working Paper Series 6308, The World Bank.
    13. Asli Demirgüç-Kunt & Ms. Enrica Detragiache, 2010. "Basel Core Principles and Bank Risk: Does Compliance Matter?," IMF Working Papers 2010/081, International Monetary Fund.
    14. Calice, Pietro, 2014. "Predicting bank insolvency in the Middle East and North Africa," Policy Research Working Paper Series 6969, The World Bank.
    15. Masciandaro, Donato & Nieto, Maria J. & Quintyn, Marc, 2011. "Exploring governance of the new European Banking AuthorityâA case for harmonization?," Journal of Financial Stability, Elsevier, vol. 7(4), pages 204-214, December.
    16. Mohammad Bitar & Sami Ben Naceur & Rym Ayadi & Thomas Walker, 2021. "Basel Compliance and Financial Stability: Evidence from Islamic Banks," Journal of Financial Services Research, Springer;Western Finance Association, vol. 60(1), pages 81-134, August.
    17. Dalenda Khouaja & Salem Lotfi Boumediene, 2014. "Regulation and Bank Deficiency: Evidence from Europe," The International Journal of Business and Finance Research, The Institute for Business and Finance Research, vol. 8(5), pages 23-33.
    18. Kaliyev Kalizhan Sagatbekovich & Mira Nurmakhanova, 2021. "Bank Regulation in the Economies in Transition," SAGE Open, , vol. 11(4), pages 21582440211, November.
    19. Monika Marcinkowska, 2013. "Regulation and self-regulation in banking: in search of optimum," Bank i Kredyt, Narodowy Bank Polski, vol. 44(2), pages 119-158.
    20. Ghossoub, Edgar A., 2023. "Economic growth, inflation, and banking sector competition," Economic Modelling, Elsevier, vol. 129(C).
    21. Bandi Ram Prasad, 2009. "Financial regulation: rising to the challenge," Macroeconomics and Finance in Emerging Market Economies, Taylor & Francis Journals, vol. 2(1), pages 155-173.

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