Bank Regulation and Supervision : What Works Best?

The authors draw on their new database on bank regulation and supervision in 107 countries to assess different governmental approaches to bank regulation and supervision and evaluate the efficacy of different regulatory and supervisory policies. Fi...

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Main Authors:	Barth, James R., Caprio, Gerard, Jr., Levine, Ross
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	ACCOUNTING STANDARDS AGENTS APPLICATIONS AUDITS BANK CAPITAL BANK CAPITAL REGULATION BANK PERFORMANCE BANK REGULATION BANK SOLVENCY BANK SUPERVISION BANKING CRISES BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SYSTEMS BANKS BUDGET CONSTRAINTS CAPITAL ADEQUACY CAPITAL ALLOCATION CAPITAL MARKETS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CHECKING COINSURANCE CONTAGIOUS BANK RUNS CORPORATE CONTROL COST OF CAPITAL COVERAGE CREDIT MARKETS CREDIT RATIONING DEPOSIT GUARANTEES DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSIT INSURANCE SYSTEMS DEPOSITORS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS ECONOMIES OF SCALE ECONOMISTS EMPIRICAL ANALYSES EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXPLOITATION EXTERNALITIES FINANCIAL CONGLOMERATES FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY GOVERNMENT BANKS GOVERNMENT REGULATIONS GOVERNMENT SECURITIES GUIDELINES INCOME INFORMATION DISCLOSURE INSOLVENCY INSURANCE ACTIVITIES INSURANCE DESIGN INSURANCE SYSTEM INTEGRITY LEGAL SYSTEMS LOAN CLASSIFICATION MORAL HAZARD NET WORTH POLICY ENVIRONMENT PORTFOLIO DIVERSIFICATION PREDICTIONS PROBLEM LOANS RATING AGENCIES REGULATORY FRAMEWORK RESERVE BANK OF AUSTRALIA RESOURCE ALLOCATION RISK PREMIA RISK TAKING SAVINGS SECURITIES SECURITIES UNDERWRITING STREAMS SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SUPERVISORY SYSTEM THEORETICAL MODELS UNIVERSAL BANKS
Online Access:	http://documents.worldbank.org/curated/en/2001/11/1631790/bank-regulation-supervision-works-best http://hdl.handle.net/10986/19419

id	okr-10986-19419
recordtype	oai_dc
spelling	okr-10986-194192021-04-23T14:03:43Z Bank Regulation and Supervision : What Works Best? Barth, James R. Caprio, Gerard, Jr. Levine, Ross ACCOUNTING STANDARDS AGENTS APPLICATIONS AUDITS BANK CAPITAL BANK CAPITAL REGULATION BANK PERFORMANCE BANK REGULATION BANK SOLVENCY BANK SUPERVISION BANKING CRISES BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SYSTEMS BANKS BUDGET CONSTRAINTS CAPITAL ADEQUACY CAPITAL ALLOCATION CAPITAL MARKETS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CHECKING COINSURANCE CONTAGIOUS BANK RUNS CORPORATE CONTROL COST OF CAPITAL COVERAGE CREDIT MARKETS CREDIT RATIONING DEPOSIT GUARANTEES DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSIT INSURANCE SYSTEMS DEPOSITORS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS ECONOMIES OF SCALE ECONOMISTS EMPIRICAL ANALYSES EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXPLOITATION EXTERNALITIES FINANCIAL CONGLOMERATES FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY GOVERNMENT BANKS GOVERNMENT REGULATIONS GOVERNMENT SECURITIES GUIDELINES INCOME INFORMATION DISCLOSURE INSOLVENCY INSURANCE ACTIVITIES INSURANCE DESIGN INSURANCE SYSTEM INTEGRITY LEGAL SYSTEMS LOAN CLASSIFICATION MORAL HAZARD NET WORTH POLICY ENVIRONMENT PORTFOLIO DIVERSIFICATION PREDICTIONS PROBLEM LOANS RATING AGENCIES REGULATORY FRAMEWORK RESERVE BANK OF AUSTRALIA RESOURCE ALLOCATION RISK PREMIA RISK TAKING SAVINGS SECURITIES SECURITIES UNDERWRITING STREAMS SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SUPERVISORY SYSTEM THEORETICAL MODELS UNIVERSAL BANKS The authors draw on their new database on bank regulation and supervision in 107 countries to assess different governmental approaches to bank regulation and supervision and evaluate the efficacy of different regulatory and supervisory policies. First, the authors assess two broad and competing theories of government regulation: the helping-hand approach, according to which governments regulate to correct market failures, and the grabbing-hand approach, according to which governments regulate to support political constituencies. Second, they assess the effect of an extensive array of regulatory and supervisory policies on the development and fragility of the banking sector. These policies include the following: Regulations on bank activities and the mixing of banking and commerce. Regulations on entry by domestic and foreign banks. Regulations on capital adequacy. Design features of deposit insurance systems. Supervisory power, independence, and resources; stringency of loan classification; provisioning standards; diversification guidelines; and powers to take prompt corrective action. Regulations governing information disclosure and fostering private sector monitoring of banks. Government ownership of banks. The results raise a cautionary flag with regard to reform strategies that place excessive reliance on a country's adherence to an extensive checklist of regulatory and supervisory practices that involve direct government oversight of and restrictions on banks. The findings, which are much more consistent with the grabbing-hand view of regulation than with the helping-hand view, suggest that the regulatory and supervisory practices most effective in promoting good performance and stability in the banking sector are those that force accurate information disclosure, empower private sector monitoring of banks, and foster incentives for private agents to exert corporate control. 2014-08-19T16:39:11Z 2014-08-19T16:39:11Z 2001-11 http://documents.worldbank.org/curated/en/2001/11/1631790/bank-regulation-supervision-works-best http://hdl.handle.net/10986/19419 English en_US Policy Research Working Paper;No. 2725 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	ACCOUNTING STANDARDS AGENTS APPLICATIONS AUDITS BANK CAPITAL BANK CAPITAL REGULATION BANK PERFORMANCE BANK REGULATION BANK SOLVENCY BANK SUPERVISION BANKING CRISES BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SYSTEMS BANKS BUDGET CONSTRAINTS CAPITAL ADEQUACY CAPITAL ALLOCATION CAPITAL MARKETS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CHECKING COINSURANCE CONTAGIOUS BANK RUNS CORPORATE CONTROL COST OF CAPITAL COVERAGE CREDIT MARKETS CREDIT RATIONING DEPOSIT GUARANTEES DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSIT INSURANCE SYSTEMS DEPOSITORS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS ECONOMIES OF SCALE ECONOMISTS EMPIRICAL ANALYSES EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXPLOITATION EXTERNALITIES FINANCIAL CONGLOMERATES FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY GOVERNMENT BANKS GOVERNMENT REGULATIONS GOVERNMENT SECURITIES GUIDELINES INCOME INFORMATION DISCLOSURE INSOLVENCY INSURANCE ACTIVITIES INSURANCE DESIGN INSURANCE SYSTEM INTEGRITY LEGAL SYSTEMS LOAN CLASSIFICATION MORAL HAZARD NET WORTH POLICY ENVIRONMENT PORTFOLIO DIVERSIFICATION PREDICTIONS PROBLEM LOANS RATING AGENCIES REGULATORY FRAMEWORK RESERVE BANK OF AUSTRALIA RESOURCE ALLOCATION RISK PREMIA RISK TAKING SAVINGS SECURITIES SECURITIES UNDERWRITING STREAMS SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SUPERVISORY SYSTEM THEORETICAL MODELS UNIVERSAL BANKS
spellingShingle	ACCOUNTING STANDARDS AGENTS APPLICATIONS AUDITS BANK CAPITAL BANK CAPITAL REGULATION BANK PERFORMANCE BANK REGULATION BANK SOLVENCY BANK SUPERVISION BANKING CRISES BANKING CRISIS BANKING INDUSTRY BANKING SECTOR BANKING SYSTEMS BANKS BUDGET CONSTRAINTS CAPITAL ADEQUACY CAPITAL ALLOCATION CAPITAL MARKETS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STANDARDS CHECKING COINSURANCE CONTAGIOUS BANK RUNS CORPORATE CONTROL COST OF CAPITAL COVERAGE CREDIT MARKETS CREDIT RATIONING DEPOSIT GUARANTEES DEPOSIT INSURANCE DEPOSIT INSURANCE SCHEMES DEPOSIT INSURANCE SYSTEMS DEPOSITORS ECONOMIC DEVELOPMENT ECONOMIC GROWTH ECONOMICS ECONOMIES OF SCALE ECONOMISTS EMPIRICAL ANALYSES EMPIRICAL EVIDENCE EMPIRICAL STUDIES EXPLOITATION EXTERNALITIES FINANCIAL CONGLOMERATES FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEMS FOREIGN BANKS FOREIGN ENTRY GOVERNMENT BANKS GOVERNMENT REGULATIONS GOVERNMENT SECURITIES GUIDELINES INCOME INFORMATION DISCLOSURE INSOLVENCY INSURANCE ACTIVITIES INSURANCE DESIGN INSURANCE SYSTEM INTEGRITY LEGAL SYSTEMS LOAN CLASSIFICATION MORAL HAZARD NET WORTH POLICY ENVIRONMENT PORTFOLIO DIVERSIFICATION PREDICTIONS PROBLEM LOANS RATING AGENCIES REGULATORY FRAMEWORK RESERVE BANK OF AUSTRALIA RESOURCE ALLOCATION RISK PREMIA RISK TAKING SAVINGS SECURITIES SECURITIES UNDERWRITING STREAMS SUPERVISORY AGENCIES SUPERVISORY AUTHORITIES SUPERVISORY SYSTEM THEORETICAL MODELS UNIVERSAL BANKS Barth, James R. Caprio, Gerard, Jr. Levine, Ross Bank Regulation and Supervision : What Works Best?
relation	Policy Research Working Paper;No. 2725
description	The authors draw on their new database on bank regulation and supervision in 107 countries to assess different governmental approaches to bank regulation and supervision and evaluate the efficacy of different regulatory and supervisory policies. First, the authors assess two broad and competing theories of government regulation: the helping-hand approach, according to which governments regulate to correct market failures, and the grabbing-hand approach, according to which governments regulate to support political constituencies. Second, they assess the effect of an extensive array of regulatory and supervisory policies on the development and fragility of the banking sector. These policies include the following: Regulations on bank activities and the mixing of banking and commerce. Regulations on entry by domestic and foreign banks. Regulations on capital adequacy. Design features of deposit insurance systems. Supervisory power, independence, and resources; stringency of loan classification; provisioning standards; diversification guidelines; and powers to take prompt corrective action. Regulations governing information disclosure and fostering private sector monitoring of banks. Government ownership of banks. The results raise a cautionary flag with regard to reform strategies that place excessive reliance on a country's adherence to an extensive checklist of regulatory and supervisory practices that involve direct government oversight of and restrictions on banks. The findings, which are much more consistent with the grabbing-hand view of regulation than with the helping-hand view, suggest that the regulatory and supervisory practices most effective in promoting good performance and stability in the banking sector are those that force accurate information disclosure, empower private sector monitoring of banks, and foster incentives for private agents to exert corporate control.
format	Publications & Research :: Policy Research Working Paper
author	Barth, James R. Caprio, Gerard, Jr. Levine, Ross
author_facet	Barth, James R. Caprio, Gerard, Jr. Levine, Ross
author_sort	Barth, James R.
title	Bank Regulation and Supervision : What Works Best?
title_short	Bank Regulation and Supervision : What Works Best?
title_full	Bank Regulation and Supervision : What Works Best?
title_fullStr	Bank Regulation and Supervision : What Works Best?
title_full_unstemmed	Bank Regulation and Supervision : What Works Best?
title_sort	bank regulation and supervision : what works best?
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2001/11/1631790/bank-regulation-supervision-works-best http://hdl.handle.net/10986/19419
_version_	1764439815310278656

Bank Regulation and Supervision : What Works Best?

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