Banking on the Principles : Compliance with Basel Core Principles and Bank Soundness
This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCP) improves bank soundness. BCP compliance assessments provide a unique source of information about the quality of bank supervision and regulation around the world. The authors find a significan...
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| Format: | Policy Research Working Paper |
| Language: | English |
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World Bank, Washington, DC
2012
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| Online Access: | http://documents.worldbank.org/curated/en/2006/06/6877442/banking-principles-compliance-basel-core-principles-bank-soundness http://hdl.handle.net/10986/8405 |
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okr-10986-84052021-04-23T14:02:41Z Banking on the Principles : Compliance with Basel Core Principles and Bank Soundness Demirgüç-Kunt, Aslı Detragiache, Enrica Tressel, Thierry ACCOUNTING ACQUISITIONS AGENTS APPLICATIONS AUDITING AUDITORS AUTONOMY BANK ASSETS BANK MANAGEMENT BANK RATINGS BANK REGULATION BANK SOLVENCY BANK SUPERVISION BANKING CRISES BANKING INDUSTRY BANKING LAWS BANKING REGULATION BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKS BORROWING BORROWING COSTS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL REGULATION CAPITALIZATION COMMERCIAL BANK CONSOLIDATED SUPERVISION CONTRACT ENFORCEMENT CORPORATE CONTROL CORPORATIONS CREDIT MARKETS CREDIT POLICIES CREDIT RATINGS CROSS COUNTRY EXPERIENCE DEBT DEPOSIT INSURANCE DEPOSITORS DEREGULATION DISCLOSURE REQUIREMENTS DISTRESSED BANKS ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EUROPEAN CENTRAL BANK EXTERNAL AUDITORS FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DATA FINANCIAL INSTITUTION FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STATEMENTS FINANCIAL STRENGTH FOREIGN BANKS GLOBALIZATION INFLATION INFORMATION DISCLOSURE INSTITUTIONAL DEVELOPMENT INTEGRITY INTEREST RATES INVESTIGATION LAWS LEGAL FRAMEWORK LIMITED LIQUID ASSETS LIQUIDITY LIQUIDITY REQUIREMENTS MACROECONOMIC POLICIES MARKET DISCIPLINE MIDDLE EAST MORAL HAZARD NORTH AFRICA OPERATING COSTS PORTFOLIOS PROFITABILITY PRUDENTIAL REGULATION PRUDENTIAL REGULATIONS PRUDENTIAL REQUIREMENTS RATING AGENCIES REGULATORY FRAMEWORK RESERVES RETURN ON ASSETS RETURN ON EQUITY RISK MANAGEMENT RISK MANAGEMENT PROCESS STATE BANKS SUB-SAHARAN AFRICA SUBORDINATED DEBT SUPERVISORY AUTHORITIES SUPERVISORY REGIMES SUPERVISORY SYSTEM SYSTEMIC BANKING CRISES TRANSPARENCY VOLATILITY This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCP) improves bank soundness. BCP compliance assessments provide a unique source of information about the quality of bank supervision and regulation around the world. The authors find a significant and positive relationship between bank soundness (measured with Moody's financial strength ratings) and compliance with principles related to information provision. Specifically, countries that require banks to report regularly and accurately their financial data to regulators and market participants have sounder banks. This relationship is robust to controlling for broad indexes of institutional quality, macroeconomic variables, sovereign ratings, as well as reverse causality. Measuring soundness through z-scores yields similar results. The findings emphasize the importance of transparency in making supervisory processes effective and strengthening market discipline. Countries aiming to upgrade banking regulation and supervision should consider giving priority to information provision over other elements of the Core Principles. 2012-06-19T14:43:21Z 2012-06-19T14:43:21Z 2006-06 http://documents.worldbank.org/curated/en/2006/06/6877442/banking-principles-compliance-basel-core-principles-bank-soundness http://hdl.handle.net/10986/8405 English Policy Research Working Paper; No. 3954 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research |
| repository_type |
Digital Repository |
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Foreign Institution |
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Digital Repositories |
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World Bank Open Knowledge Repository |
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World Bank |
| language |
English |
| topic |
ACCOUNTING ACQUISITIONS AGENTS APPLICATIONS AUDITING AUDITORS AUTONOMY BANK ASSETS BANK MANAGEMENT BANK RATINGS BANK REGULATION BANK SOLVENCY BANK SUPERVISION BANKING CRISES BANKING INDUSTRY BANKING LAWS BANKING REGULATION BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKS BORROWING BORROWING COSTS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL REGULATION CAPITALIZATION COMMERCIAL BANK CONSOLIDATED SUPERVISION CONTRACT ENFORCEMENT CORPORATE CONTROL CORPORATIONS CREDIT MARKETS CREDIT POLICIES CREDIT RATINGS CROSS COUNTRY EXPERIENCE DEBT DEPOSIT INSURANCE DEPOSITORS DEREGULATION DISCLOSURE REQUIREMENTS DISTRESSED BANKS ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EUROPEAN CENTRAL BANK EXTERNAL AUDITORS FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DATA FINANCIAL INSTITUTION FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STATEMENTS FINANCIAL STRENGTH FOREIGN BANKS GLOBALIZATION INFLATION INFORMATION DISCLOSURE INSTITUTIONAL DEVELOPMENT INTEGRITY INTEREST RATES INVESTIGATION LAWS LEGAL FRAMEWORK LIMITED LIQUID ASSETS LIQUIDITY LIQUIDITY REQUIREMENTS MACROECONOMIC POLICIES MARKET DISCIPLINE MIDDLE EAST MORAL HAZARD NORTH AFRICA OPERATING COSTS PORTFOLIOS PROFITABILITY PRUDENTIAL REGULATION PRUDENTIAL REGULATIONS PRUDENTIAL REQUIREMENTS RATING AGENCIES REGULATORY FRAMEWORK RESERVES RETURN ON ASSETS RETURN ON EQUITY RISK MANAGEMENT RISK MANAGEMENT PROCESS STATE BANKS SUB-SAHARAN AFRICA SUBORDINATED DEBT SUPERVISORY AUTHORITIES SUPERVISORY REGIMES SUPERVISORY SYSTEM SYSTEMIC BANKING CRISES TRANSPARENCY VOLATILITY |
| spellingShingle |
ACCOUNTING ACQUISITIONS AGENTS APPLICATIONS AUDITING AUDITORS AUTONOMY BANK ASSETS BANK MANAGEMENT BANK RATINGS BANK REGULATION BANK SOLVENCY BANK SUPERVISION BANKING CRISES BANKING INDUSTRY BANKING LAWS BANKING REGULATION BANKING SECTOR BANKING SUPERVISION BANKING SYSTEM BANKING SYSTEMS BANKS BORROWING BORROWING COSTS CAPITAL ADEQUACY CAPITAL ADEQUACY RATIOS CAPITAL REGULATION CAPITALIZATION COMMERCIAL BANK CONSOLIDATED SUPERVISION CONTRACT ENFORCEMENT CORPORATE CONTROL CORPORATIONS CREDIT MARKETS CREDIT POLICIES CREDIT RATINGS CROSS COUNTRY EXPERIENCE DEBT DEPOSIT INSURANCE DEPOSITORS DEREGULATION DISCLOSURE REQUIREMENTS DISTRESSED BANKS ECONOMIC GROWTH ECONOMICS EMERGING MARKETS EUROPEAN CENTRAL BANK EXTERNAL AUDITORS FINANCIAL CRISES FINANCIAL CRISIS FINANCIAL DATA FINANCIAL INSTITUTION FINANCIAL INTERMEDIATION FINANCIAL MARKETS FINANCIAL POLICIES FINANCIAL SERVICES FINANCIAL STABILITY FINANCIAL STATEMENTS FINANCIAL STRENGTH FOREIGN BANKS GLOBALIZATION INFLATION INFORMATION DISCLOSURE INSTITUTIONAL DEVELOPMENT INTEGRITY INTEREST RATES INVESTIGATION LAWS LEGAL FRAMEWORK LIMITED LIQUID ASSETS LIQUIDITY LIQUIDITY REQUIREMENTS MACROECONOMIC POLICIES MARKET DISCIPLINE MIDDLE EAST MORAL HAZARD NORTH AFRICA OPERATING COSTS PORTFOLIOS PROFITABILITY PRUDENTIAL REGULATION PRUDENTIAL REGULATIONS PRUDENTIAL REQUIREMENTS RATING AGENCIES REGULATORY FRAMEWORK RESERVES RETURN ON ASSETS RETURN ON EQUITY RISK MANAGEMENT RISK MANAGEMENT PROCESS STATE BANKS SUB-SAHARAN AFRICA SUBORDINATED DEBT SUPERVISORY AUTHORITIES SUPERVISORY REGIMES SUPERVISORY SYSTEM SYSTEMIC BANKING CRISES TRANSPARENCY VOLATILITY Demirgüç-Kunt, Aslı Detragiache, Enrica Tressel, Thierry Banking on the Principles : Compliance with Basel Core Principles and Bank Soundness |
| relation |
Policy Research Working Paper; No. 3954 |
| description |
This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCP) improves bank soundness. BCP compliance assessments provide a unique source of information about the quality of bank supervision and regulation around the world. The authors find a significant and positive relationship between bank soundness (measured with Moody's financial strength ratings) and compliance with principles related to information provision. Specifically, countries that require banks to report regularly and accurately their financial data to regulators and market participants have sounder banks. This relationship is robust to controlling for broad indexes of institutional quality, macroeconomic variables, sovereign ratings, as well as reverse causality. Measuring soundness through z-scores yields similar results. The findings emphasize the importance of transparency in making supervisory processes effective and strengthening market discipline. Countries aiming to upgrade banking regulation and supervision should consider giving priority to information provision over other elements of the Core Principles. |
| format |
Publications & Research :: Policy Research Working Paper |
| author |
Demirgüç-Kunt, Aslı Detragiache, Enrica Tressel, Thierry |
| author_facet |
Demirgüç-Kunt, Aslı Detragiache, Enrica Tressel, Thierry |
| author_sort |
Demirgüç-Kunt, Aslı |
| title |
Banking on the Principles : Compliance with Basel Core Principles and Bank Soundness |
| title_short |
Banking on the Principles : Compliance with Basel Core Principles and Bank Soundness |
| title_full |
Banking on the Principles : Compliance with Basel Core Principles and Bank Soundness |
| title_fullStr |
Banking on the Principles : Compliance with Basel Core Principles and Bank Soundness |
| title_full_unstemmed |
Banking on the Principles : Compliance with Basel Core Principles and Bank Soundness |
| title_sort |
banking on the principles : compliance with basel core principles and bank soundness |
| publisher |
World Bank, Washington, DC |
| publishDate |
2012 |
| url |
http://documents.worldbank.org/curated/en/2006/06/6877442/banking-principles-compliance-basel-core-principles-bank-soundness http://hdl.handle.net/10986/8405 |
| _version_ |
1764406200558944256 |