Bank Regulation and Supervision: What Works Best? / James R. Barth, Gerard Caprio, Jr., Ross Levine.

Format:

Book

Author/Creator:

Barth, James R.

Contributor:

National Bureau of Economic Research.

Caprio, Gerard.

Levine, Ross.

Series:

Working Paper Series (National Bureau of Economic Research) no. w9323.

NBER working paper series no. w9323

Language:

English

Physical Description:

1 online resource: illustrations (black and white);

Other Title:

Bank Regulation and Supervision

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2002.

Summary:

This paper uses our new database on bank regulation and supervision in 107 countries to assess the relationship between specific regulatory and supervisory practices and banking-sector development, efficiency, and fragility. The paper examines: (i) regulatory restrictions on bank activities and the mixing of banking and commerce; (ii) regulations on domestic and foreign bank entry; (iii) regulations on capital adequacy; (iv) deposit insurance system design features; (v) supervisory power, independence, and resources, (vi) loan classification stringency, provisioning standards, and diversification guidelines; (vii) regulations fostering information disclosure and private-sector monitoring of banks; and (viii) government ownership. The results, albeit tentative, raise a cautionary flag regarding government policies that rely excessively on direct government supervision and regulation of bank activities. The findings instead suggest that policies that rely on guidelines that (1) force accurate information disclosure, (2) empower private-sector corporate control of banks, and (3) foster incentives for private agents to exert corporate control work best to promote bank development, performance and stability.

Notes:

Print version record

November 2002.