Abstract

http://ssrn.com/abstract=1579352
 
 

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Do Bank Regulation, Supervision and Monitoring Enhance or Impede Bank Efficiency?


James R. Barth


Auburn University

Chen Lin


University of Hong Kong - Faculty of Business and Economics

(马跃) Yue Ma


City University of Hong Kong (CityUHK) - Department of Economics & Finance

Jesús Seade


Zhongshan University - Department of Economics

Frank M. Song


University of Hong Kong - School of Economics and Finance

March 21, 2010


Abstract:     
The recent global financial crisis has spurred renewed interest in identifying those reforms in bank regulation that would work best to promote bank development, performance and stability. Building upon three recent world-wide surveys on bank regulation (Barth et al., 2004, 2006, and 2008), we attempt to contribute to this assessment by examining whether bank regulation, supervision and monitoring enhance or impede bank operating efficiency. Based on an unbalanced panel analysis of more than 4,050 banks observations in 72 countries over the time period 1999-2007, we find that tighter restrictions on bank activities are negatively associated with bank efficiency while greater capital regulation stringency is marginally and positively associated with bank efficiency. In addition, we find that a strengthening of official supervisory power is positively associated with bank efficiency only in countries with independent supervisory authorities. Moreover, independence coupled with a more experienced supervisory authority tends to enhance bank efficiency. Finally, market-based monitoring of banks in terms of more financial transparency is positively associated with bank efficiency.

Number of Pages in PDF File: 50

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Date posted: March 28, 2010  

Suggested Citation

Barth, James R. and Lin, Chen and Ma, (马跃) Yue and Seade, Jesús and Song, Frank M., Do Bank Regulation, Supervision and Monitoring Enhance or Impede Bank Efficiency? (March 21, 2010). Available at SSRN: http://ssrn.com/abstract=1579352 or http://dx.doi.org/10.2139/ssrn.1579352

Contact Information

James R. Barth (Contact Author)
Auburn University ( email )
415 West Magnolia Avenue
Auburn, AL 36849
United States
334-844-2469 (Phone)
334-844-4960 (Fax)
Chen Lin
University of Hong Kong - Faculty of Business and Economics ( email )
Pokfulam Road
Hong Kong
China
Yue Ma
City University of Hong Kong (CityUHK) - Department of Economics & Finance ( email )
83 Tat Chee Avenue
Kowloon
Hong Kong
HOME PAGE: http://www.cb.cityu.edu.hk/staff/yuema24
Jesús Seade
Zhongshan University - Department of Economics ( email )
Hong Kong
China
Frank M. Song
University of Hong Kong - School of Economics and Finance ( email )
8th Floor Kennedy Town Centre
23 Belcher's Street
Kennedy Town
Hong Kong
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