Cross Border Banking Supervision : Incentive Conflicts in Supervisory Information Sharing between Home and Host Supervisors
The global financial crisis has uncovered a number of weaknesses in the supervision and regulation of cross border banks. One such weakness was the lack of effective cooperation among banking supervisors. Since then, international bodies, such as t...
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| Format: | Policy Research Working Paper |
| Language: | English |
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2012
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| Online Access: | http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111103150252 http://hdl.handle.net/10986/3637 |
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okr-10986-3637 |
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| recordtype |
oai_dc |
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Digital Repository |
| institution_category |
Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
| collection |
World Bank |
| language |
English |
| topic |
BANKING SUPERVISION CROSS BORDER BANKING SUPERVISION PRUDENTIAL SUPERVISION SUPERVISORY COLLEGES SUPERVISORY COOPERATION HOME HOST COUNTRY ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS ACCOUNTABILITY ACCOUNTING ACCOUNTING STANDARDS ASSET VALUE AUDITING AUDITS BANK CLOSURES BANK CUSTOMERS BANK FAILURE BANK FAILURES BANK OF CANADA BANK SUPERVISORS BANKING ASSETS BANKING LAW BANKING REGULATION BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKRUPTCY COURTS BANKS BARGAINING BARGAINING POWER BROKER BROKER DEALER CAPACITY CONSTRAINTS CAPITAL ADEQUACY CAPITAL MARKETS CAPITAL NEEDS CAPITAL REQUIREMENTS CENTRAL BANK CENTRAL BANKS CODE OF CONDUCT COMMERCIAL BANKS CONFIDENTIALITY CONFLICT OF INTEREST CONFLICTS OF INTEREST CONSOLIDATED SUPERVISION CONSUMER PROTECTION CONTAGION CORPORATE INSOLVENCY CREDIT GROWTH CREDIT RISK CREDITORS CROSS BORDER BANKING SUPERVISION DEPOSIT DEPOSIT LIABILITIES DEPOSITORS DISCLOSURE OF INFORMATION DISCLOSURE REQUIREMENTS DIVIDENDS DOMESTIC MARKET DOMESTIC REGULATOR DRIVERS ECONOMIC BENEFITS ENFORCEABLE CONTRACTS EQUILIBRIUM BEHAVIORS EXPOSURE EXTERNALITIES FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL EXPOSURE FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIARY FINANCIAL MARKET FINANCIAL REGULATION FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEM STABILITY FINANCIAL SYSTEMS FLOW OF INFORMATION FOREIGN BANKS FREE TRADE FULL DISCLOSURE GAME THEORY GLOBAL FINANCIAL STABILITY GLOBAL FINANCIAL SYSTEM HARMONIZATION HOLDING HOLDING COMPANY HOME COUNTRY HOST COUNTRIES HOST COUNTRY INCENTIVE PROBLEMS INCENTIVE STRUCTURE INCOME INFORMATION ASYMMETRIES INFORMATION ASYMMETRY INFORMATION FLOWS INFORMATION SHARING INSURANCE INSURERS INTERNAL CONTROLS INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL BANKS INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL TRADE ISSUANCE JURISDICTION JURISDICTIONS LAWS LEGAL AUTHORITY LEGAL CONSTRAINTS LEGAL FRAMEWORK LEGAL INFRASTRUCTURE LEGISLATION LENDER LENDER OF LAST RESORT LIQUIDITY LIQUIDITY CRISIS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS MANDATES MARKET INTEGRATION MARKET PARTICIPANTS MARKET RISK MARKET SUPERVISION MINIMUM CAPITAL REQUIREMENTS MONETARY FUND MORAL HAZARD OPERATIONAL RISK OPPORTUNISTIC BEHAVIOR OUTSOURCING PEER REVIEW PLEDGES PRINCIPAL-AGENT PROBLEM PRINCIPAL-AGENT PROBLEMS PRINCIPAL-AGENT RELATIONSHIP PRINCIPAL-AGENT RELATIONSHIPS PRIVATE BANKS PRIVATE SECTOR DEVELOPMENT PRUDENTIAL REGULATION PRUDENTIAL SUPERVISION RECAPITALIZATION REGULATOR REGULATORS REGULATORY AGENCIES REGULATORY APPROACHES REGULATORY AUTHORITIES REGULATORY ENVIRONMENT REGULATORY FORBEARANCE REGULATORY FRAMEWORK REPUTATION REPUTATION RISK RESERVE RESERVE BANK RESERVE BANK OF AUSTRALIA RESERVE BANK OF NEW ZEALAND RETURN RISK ASSESSMENTS RISK EXPOSURES RISK MANAGEMENT RISK PROFILE SAFETY SAVINGS SECRECY LAWS SECRETARIES SECURITIZATION SINGLE MARKET SMALL BANKS SUBSIDIARIES SUBSIDIARY SUPERVISION OF BANK SUPERVISORY AGENCIES SUPERVISORY AGENCY SUPERVISORY AUTHORITIES SUPERVISORY AUTHORITY SUPERVISORY FRAMEWORK SUPERVISORY POWERS SYSTEMIC RISK TAX TRADE ASSOCIATION TRADING TREASURIES |
| spellingShingle |
BANKING SUPERVISION CROSS BORDER BANKING SUPERVISION PRUDENTIAL SUPERVISION SUPERVISORY COLLEGES SUPERVISORY COOPERATION HOME HOST COUNTRY ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS ACCOUNTABILITY ACCOUNTING ACCOUNTING STANDARDS ASSET VALUE AUDITING AUDITS BANK CLOSURES BANK CUSTOMERS BANK FAILURE BANK FAILURES BANK OF CANADA BANK SUPERVISORS BANKING ASSETS BANKING LAW BANKING REGULATION BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKRUPTCY COURTS BANKS BARGAINING BARGAINING POWER BROKER BROKER DEALER CAPACITY CONSTRAINTS CAPITAL ADEQUACY CAPITAL MARKETS CAPITAL NEEDS CAPITAL REQUIREMENTS CENTRAL BANK CENTRAL BANKS CODE OF CONDUCT COMMERCIAL BANKS CONFIDENTIALITY CONFLICT OF INTEREST CONFLICTS OF INTEREST CONSOLIDATED SUPERVISION CONSUMER PROTECTION CONTAGION CORPORATE INSOLVENCY CREDIT GROWTH CREDIT RISK CREDITORS CROSS BORDER BANKING SUPERVISION DEPOSIT DEPOSIT LIABILITIES DEPOSITORS DISCLOSURE OF INFORMATION DISCLOSURE REQUIREMENTS DIVIDENDS DOMESTIC MARKET DOMESTIC REGULATOR DRIVERS ECONOMIC BENEFITS ENFORCEABLE CONTRACTS EQUILIBRIUM BEHAVIORS EXPOSURE EXTERNALITIES FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL EXPOSURE FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIARY FINANCIAL MARKET FINANCIAL REGULATION FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEM STABILITY FINANCIAL SYSTEMS FLOW OF INFORMATION FOREIGN BANKS FREE TRADE FULL DISCLOSURE GAME THEORY GLOBAL FINANCIAL STABILITY GLOBAL FINANCIAL SYSTEM HARMONIZATION HOLDING HOLDING COMPANY HOME COUNTRY HOST COUNTRIES HOST COUNTRY INCENTIVE PROBLEMS INCENTIVE STRUCTURE INCOME INFORMATION ASYMMETRIES INFORMATION ASYMMETRY INFORMATION FLOWS INFORMATION SHARING INSURANCE INSURERS INTERNAL CONTROLS INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL BANKS INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL TRADE ISSUANCE JURISDICTION JURISDICTIONS LAWS LEGAL AUTHORITY LEGAL CONSTRAINTS LEGAL FRAMEWORK LEGAL INFRASTRUCTURE LEGISLATION LENDER LENDER OF LAST RESORT LIQUIDITY LIQUIDITY CRISIS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS MANDATES MARKET INTEGRATION MARKET PARTICIPANTS MARKET RISK MARKET SUPERVISION MINIMUM CAPITAL REQUIREMENTS MONETARY FUND MORAL HAZARD OPERATIONAL RISK OPPORTUNISTIC BEHAVIOR OUTSOURCING PEER REVIEW PLEDGES PRINCIPAL-AGENT PROBLEM PRINCIPAL-AGENT PROBLEMS PRINCIPAL-AGENT RELATIONSHIP PRINCIPAL-AGENT RELATIONSHIPS PRIVATE BANKS PRIVATE SECTOR DEVELOPMENT PRUDENTIAL REGULATION PRUDENTIAL SUPERVISION RECAPITALIZATION REGULATOR REGULATORS REGULATORY AGENCIES REGULATORY APPROACHES REGULATORY AUTHORITIES REGULATORY ENVIRONMENT REGULATORY FORBEARANCE REGULATORY FRAMEWORK REPUTATION REPUTATION RISK RESERVE RESERVE BANK RESERVE BANK OF AUSTRALIA RESERVE BANK OF NEW ZEALAND RETURN RISK ASSESSMENTS RISK EXPOSURES RISK MANAGEMENT RISK PROFILE SAFETY SAVINGS SECRECY LAWS SECRETARIES SECURITIZATION SINGLE MARKET SMALL BANKS SUBSIDIARIES SUBSIDIARY SUPERVISION OF BANK SUPERVISORY AGENCIES SUPERVISORY AGENCY SUPERVISORY AUTHORITIES SUPERVISORY AUTHORITY SUPERVISORY FRAMEWORK SUPERVISORY POWERS SYSTEMIC RISK TAX TRADE ASSOCIATION TRADING TREASURIES D'Hulster, Katia Cross Border Banking Supervision : Incentive Conflicts in Supervisory Information Sharing between Home and Host Supervisors |
| geographic_facet |
The World Region The World Region |
| relation |
Policy Research working paper ; no. WPS 5871 |
| description |
The global financial crisis has
uncovered a number of weaknesses in the supervision and
regulation of cross border banks. One such weakness was the
lack of effective cooperation among banking supervisors.
Since then, international bodies, such as the G-20, the
Financial Stability Board and the Basel Committee have
actively promoted the use of supervisory colleges. The
objective of this paper is to explore the obstacles to
effective cross border supervisory information sharing. More
specifically, a schematic presentation illustrating the
misalignments in incentives for information sharing between
home and host supervisors under the current supervisory
task-sharing anchored in the Basel Concordat is developed.
This paper finds that in the absence of an ex ante agreed
upon resolution and burden-sharing mechanism and
deteriorating health of the bank, incentive conflicts
escalate and supervisory cooperation breaks down. The
promotion of good practices for cooperation in supervisory
colleges is thus not sufficient to address the existing
incentive conflicts. What is needed is a rigorous analysis
and review of the supervisory task-sharing framework, so
that the right incentives are secured during all stages of
the supervisory process. For this purpose, it is essential
that policy makers integrate and harmonize the current
debates on crisis management, resolution policy and good
supervisory practices for cross border banking supervision. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
D'Hulster, Katia |
| author_facet |
D'Hulster, Katia |
| author_sort |
D'Hulster, Katia |
| title |
Cross Border Banking Supervision : Incentive Conflicts in Supervisory Information Sharing between Home and Host Supervisors |
| title_short |
Cross Border Banking Supervision : Incentive Conflicts in Supervisory Information Sharing between Home and Host Supervisors |
| title_full |
Cross Border Banking Supervision : Incentive Conflicts in Supervisory Information Sharing between Home and Host Supervisors |
| title_fullStr |
Cross Border Banking Supervision : Incentive Conflicts in Supervisory Information Sharing between Home and Host Supervisors |
| title_full_unstemmed |
Cross Border Banking Supervision : Incentive Conflicts in Supervisory Information Sharing between Home and Host Supervisors |
| title_sort |
cross border banking supervision : incentive conflicts in supervisory information sharing between home and host supervisors |
| publishDate |
2012 |
| url |
http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111103150252 http://hdl.handle.net/10986/3637 |
| _version_ |
1764387549602643968 |
| spelling |
okr-10986-36372021-04-23T14:02:11Z Cross Border Banking Supervision : Incentive Conflicts in Supervisory Information Sharing between Home and Host Supervisors D'Hulster, Katia BANKING SUPERVISION CROSS BORDER BANKING SUPERVISION PRUDENTIAL SUPERVISION SUPERVISORY COLLEGES SUPERVISORY COOPERATION HOME HOST COUNTRY ACCESS TO CAPITAL ACCESS TO CAPITAL MARKETS ACCOUNTABILITY ACCOUNTING ACCOUNTING STANDARDS ASSET VALUE AUDITING AUDITS BANK CLOSURES BANK CUSTOMERS BANK FAILURE BANK FAILURES BANK OF CANADA BANK SUPERVISORS BANKING ASSETS BANKING LAW BANKING REGULATION BANKING SECTOR BANKING SERVICES BANKING SYSTEM BANKING SYSTEMS BANKRUPTCY BANKRUPTCY COURTS BANKS BARGAINING BARGAINING POWER BROKER BROKER DEALER CAPACITY CONSTRAINTS CAPITAL ADEQUACY CAPITAL MARKETS CAPITAL NEEDS CAPITAL REQUIREMENTS CENTRAL BANK CENTRAL BANKS CODE OF CONDUCT COMMERCIAL BANKS CONFIDENTIALITY CONFLICT OF INTEREST CONFLICTS OF INTEREST CONSOLIDATED SUPERVISION CONSUMER PROTECTION CONTAGION CORPORATE INSOLVENCY CREDIT GROWTH CREDIT RISK CREDITORS CROSS BORDER BANKING SUPERVISION DEPOSIT DEPOSIT LIABILITIES DEPOSITORS DISCLOSURE OF INFORMATION DISCLOSURE REQUIREMENTS DIVIDENDS DOMESTIC MARKET DOMESTIC REGULATOR DRIVERS ECONOMIC BENEFITS ENFORCEABLE CONTRACTS EQUILIBRIUM BEHAVIORS EXPOSURE EXTERNALITIES FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL EXPOSURE FINANCIAL INSTITUTION FINANCIAL INSTITUTIONS FINANCIAL INTEGRATION FINANCIAL INTERMEDIARY FINANCIAL MARKET FINANCIAL REGULATION FINANCIAL SECTOR FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL SYSTEM FINANCIAL SYSTEM STABILITY FINANCIAL SYSTEMS FLOW OF INFORMATION FOREIGN BANKS FREE TRADE FULL DISCLOSURE GAME THEORY GLOBAL FINANCIAL STABILITY GLOBAL FINANCIAL SYSTEM HARMONIZATION HOLDING HOLDING COMPANY HOME COUNTRY HOST COUNTRIES HOST COUNTRY INCENTIVE PROBLEMS INCENTIVE STRUCTURE INCOME INFORMATION ASYMMETRIES INFORMATION ASYMMETRY INFORMATION FLOWS INFORMATION SHARING INSURANCE INSURERS INTERNAL CONTROLS INTERNATIONAL BANK INTERNATIONAL BANKING INTERNATIONAL BANKS INTERNATIONAL FINANCIAL INSTITUTIONS INTERNATIONAL TRADE ISSUANCE JURISDICTION JURISDICTIONS LAWS LEGAL AUTHORITY LEGAL CONSTRAINTS LEGAL FRAMEWORK LEGAL INFRASTRUCTURE LEGISLATION LENDER LENDER OF LAST RESORT LIQUIDITY LIQUIDITY CRISIS LIQUIDITY MANAGEMENT LIQUIDITY PROBLEMS MANDATES MARKET INTEGRATION MARKET PARTICIPANTS MARKET RISK MARKET SUPERVISION MINIMUM CAPITAL REQUIREMENTS MONETARY FUND MORAL HAZARD OPERATIONAL RISK OPPORTUNISTIC BEHAVIOR OUTSOURCING PEER REVIEW PLEDGES PRINCIPAL-AGENT PROBLEM PRINCIPAL-AGENT PROBLEMS PRINCIPAL-AGENT RELATIONSHIP PRINCIPAL-AGENT RELATIONSHIPS PRIVATE BANKS PRIVATE SECTOR DEVELOPMENT PRUDENTIAL REGULATION PRUDENTIAL SUPERVISION RECAPITALIZATION REGULATOR REGULATORS REGULATORY AGENCIES REGULATORY APPROACHES REGULATORY AUTHORITIES REGULATORY ENVIRONMENT REGULATORY FORBEARANCE REGULATORY FRAMEWORK REPUTATION REPUTATION RISK RESERVE RESERVE BANK RESERVE BANK OF AUSTRALIA RESERVE BANK OF NEW ZEALAND RETURN RISK ASSESSMENTS RISK EXPOSURES RISK MANAGEMENT RISK PROFILE SAFETY SAVINGS SECRECY LAWS SECRETARIES SECURITIZATION SINGLE MARKET SMALL BANKS SUBSIDIARIES SUBSIDIARY SUPERVISION OF BANK SUPERVISORY AGENCIES SUPERVISORY AGENCY SUPERVISORY AUTHORITIES SUPERVISORY AUTHORITY SUPERVISORY FRAMEWORK SUPERVISORY POWERS SYSTEMIC RISK TAX TRADE ASSOCIATION TRADING TREASURIES The global financial crisis has uncovered a number of weaknesses in the supervision and regulation of cross border banks. One such weakness was the lack of effective cooperation among banking supervisors. Since then, international bodies, such as the G-20, the Financial Stability Board and the Basel Committee have actively promoted the use of supervisory colleges. The objective of this paper is to explore the obstacles to effective cross border supervisory information sharing. More specifically, a schematic presentation illustrating the misalignments in incentives for information sharing between home and host supervisors under the current supervisory task-sharing anchored in the Basel Concordat is developed. This paper finds that in the absence of an ex ante agreed upon resolution and burden-sharing mechanism and deteriorating health of the bank, incentive conflicts escalate and supervisory cooperation breaks down. The promotion of good practices for cooperation in supervisory colleges is thus not sufficient to address the existing incentive conflicts. What is needed is a rigorous analysis and review of the supervisory task-sharing framework, so that the right incentives are secured during all stages of the supervisory process. For this purpose, it is essential that policy makers integrate and harmonize the current debates on crisis management, resolution policy and good supervisory practices for cross border banking supervision. 2012-03-19T18:05:59Z 2012-03-19T18:05:59Z 2011-11-01 http://www-wds.worldbank.org/external/default/main?menuPK=64187510&pagePK=64193027&piPK=64187937&theSitePK=523679&menuPK=64187510&searchMenuPK=64187283&siteName=WDS&entityID=000158349_20111103150252 http://hdl.handle.net/10986/3637 English Policy Research working paper ; no. WPS 5871 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank Publications & Research :: Policy Research Working Paper The World Region The World Region |