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http://ssrn.com/abstract=961755
 
 

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The Fear of Freedom: Politicians and the Independence and Accountability of Financial Sector Supervisors


Marc Quintyn


International Monetary Fund (IMF)

Silvia Loyda Ramirez


International Monetary Fund (IMF)

Michael Taylor


Hong Kong Monetary Authority

February 2007

IMF Working Paper No. 07/25

Abstract:     
Compared with the case of central bank independence, independence for financial sector supervisors remains more controversial. This paper analyzes changes in independence and accountability arrangements in a set of 32 countries that overhauled their legal and/or institutional frameworks for supervision in recent years. Despite improvements, there is strong evidence that the endorsement of independence remains half-hearted, which shows itself through either overcompensation on the accountability side, or resort to political control mechanisms. The latter could potentially undermine the agency's credibility. The results indicate that policymakers still need to be persuaded of the long-term benefits of independence for financial sector soundness, and of the potential for a virtuous interaction between independence and accountability, if the arrangements are well-designed.

Number of Pages in PDF File: 52

Keywords: Bank supervision, financial regulation, agency independence, public administration

JEL Classification: G21, G28, H89, L51

working papers series


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Date posted: February 7, 2007  

Suggested Citation

Quintyn, Marc and Ramirez, Silvia Loyda and Taylor, Michael, The Fear of Freedom: Politicians and the Independence and Accountability of Financial Sector Supervisors (February 2007). IMF Working Papers, Vol. , pp. 1-50, 2007. Available at SSRN: http://ssrn.com/abstract=961755

Contact Information

Marc Quintyn
International Monetary Fund (IMF) ( email )
700 19th Street NW
Washington, DC 20431
United States
Silvia Loyda Ramirez (Contact Author)
International Monetary Fund (IMF) ( email )
700 19th Street, N.W.
Washington, DC 20431
United States
Michael Taylor
Hong Kong Monetary Authority ( email )
3 Garden Road, 30th Floor
Hong Kong
China
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