Bank Supervision Russian Style: Evidence of Conflicts between Micro- and Macro-Prudential Concerns

47 Pages Posted: 18 Oct 2007  

Sophie Claeys

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

Multiple version iconThere are 2 versions of this paper

Date Written: March 2007

Abstract

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.

Keywords: Prudential supervision, bank stability, systemic stability

JEL Classification: G2, N2, E5

Suggested Citation

Claeys, Sophie and Schoors, Koen J. L., Bank Supervision Russian Style: Evidence of Conflicts between Micro- and Macro-Prudential Concerns (March 2007). Riksbank Research Paper Series No. 205. Available at SSRN: https://ssrn.com/abstract=1022030 or http://dx.doi.org/10.2139/ssrn.1022030

Sophie Claeys

Sveriges Riksbank - Research Division ( email )

S-103 37 Stockholm
Sweden

Ghent University-Universiteit Gent - Centre for Russian International Socio-Political and Economic Studies (CERISE) ( email )

Gent, 9000
Belgium

Ghent University-Universiteit Gent - Department of Financial Economics ( email )

Ghent, 9000
Belgium
+32 9 264 34 91 (Phone)
+32 9 264 89 95 (Fax)

Koen J. L. Schoors (Contact Author)

Ghent University-Universiteit Gent - Department of General Economics ( email )

Tweekerkenstraat 2
Ghent, 9000
Belgium
+32 9 264 34 78 (Phone)
+32 9 264 35 99 (Fax)

Ghent University-Universiteit Gent - Centre for Russian International Socio-Political and Economic Studies (CERISE) ( email )

Tweekerkenstraat 2
Ghent, 9000
Belgium
+32 9 264 34 78 (Phone)
+32 9 265 35 99 (Fax)

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