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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Bibliographic Details
Main Author: D'Hulster, Katia
Format: Policy Research Working Paper
Language:English
Published: 2012
Subjects:
TAX
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
id okr-10986-3637
recordtype oai_dc
repository_type Digital Repository
institution_category Foreign Institution
institution Digital Repositories
building 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