Basel Core Principles and Bank Risk: Does Compliance Matter?

28 Pages Posted: 26 Apr 2010

See all articles by Enrica Detragiache

Enrica Detragiache

International Monetary Fund (IMF) - European Department

Asli Demirgüç-Kunt

World Bank - Development Research Group; World Bank

Date Written: March 2010

Abstract

This paper studies whether compliance with the Basel Core Principles for effective banking supervision (BCPs) is associated with bank soundness. Using data for over 3,000 banks in 86countries, we find that neither the overall index of BCP compliance nor its individual components are robustly associated with bank risk measured by Z-scores. We also fail to find a relationship between BCP compliance and systemic risk measured by a system-wide Zscore.

Keywords: Bank reforms, Bank regulations, Bank soundness, Bank supervision, Banks, Basel Core Principles, Credit risk, Cross country analysis, Financial risk

Suggested Citation

Detragiache, Enrica and Demirgüç-Kunt, Asli, Basel Core Principles and Bank Risk: Does Compliance Matter? (March 2010). IMF Working Papers, Vol. , pp. 1-27, 2010. Available at SSRN: https://ssrn.com/abstract=1594552

Enrica Detragiache (Contact Author)

International Monetary Fund (IMF) - European Department ( email )

700 19th Street NW
Washington, DC 20431
United States

Asli Demirgüç-Kunt

World Bank - Development Research Group ( email )

United States
202-473-7479 (Phone)
202-522-1155 (Fax)

HOME PAGE: http://econ.worldbank.org/staff/ademirguckunt/

World Bank ( email )

1818 H Street, NW
Washington, DC 20433
United States

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