Bank Supervision Russian Style: Evidence of Conflicts between Micro- and Macro-Prudential Concerns
Sveriges Riksbank - Research Division; Ghent University-Universiteit Gent - Centre for Russian International Socio-Political and Economic Studies (CERISE); Ghent University-Universiteit Gent - Department of Financial Economics
Koen J. L. Schoors
Ghent University-Universiteit Gent - Centre for Russian International Socio-Political and Economic Studies (CERISE); Ghent University-Universiteit Gent - Department of General Economics
Riksbank Research Paper Series No. 205
Supervisors sometimes have to manage both the micro- and macro-prudential dimensions of bank stability. These may either conflict or complement each other. We analyze prudential supervision by the Central Bank of Russia (CBR). We find evidence of micro-prudential concerns, measured as the rule-based enforcement of bank standards. Macro-prudential concerns are also documented: Banks in concentrated bank markets, large banks, money center banks and large deposit banks are less likely to face license withdrawal. Further, the CBR is reluctant to withdraw licenses when there are too many banks to fail. Finally, macro-prudential concerns induce regulatory forbearance, revealing conflicts with micro-prudential objectives.
Number of Pages in PDF File: 47
Keywords: Prudential supervision, bank stability, systemic stability
JEL Classification: G2, N2, E5
Date posted: October 18, 2007
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