The Evolution and Impact of Bank Regulations

27 Pages Posted: 20 Apr 2016

See all articles by James R. Barth

James R. Barth

Auburn University; Milken Institute

Gerard Caprio

Williams College

Ross Levine

University of California, Berkeley - Haas School of Business; National Bureau of Economic Research (NBER)

Date Written: December 1, 2012

Abstract

This paper reassesses what works in banking regulation based on the new World Bank survey (Survey IV) of bank regulation and supervision around world. The paper briefly presents new and official survey information on bank regulations in more than 125 countries, makes comparisons with earlier surveys since 1999, and assesses the relationship between changes in bank regulations and banking system performance. The data suggest that many countries made capital regulations more stringent and granted greater discretionary power to official supervisory agencies over the past 12 years, but most countries have not enhanced the ability and incentives of private investors to monitor banks rigorously -- and several have weakened such private monitoring incentives. Although it is difficult to draw causal inferences from thesedata, and while there are material cross-country differences in the evolution of regulatory reforms, existing evidence suggests that many countries are making counterproductive changes to their bank regulations by not enhancing the ability and incentives of private investors to scrutinize banks.

Keywords: Banks & Banking Reform, Access to Finance, Debt Markets, Public Sector Corruption & Anticorruption Measures, Emerging Markets

Suggested Citation

Barth, James R. and Caprio, Gerard and Levine, Ross Eric, The Evolution and Impact of Bank Regulations (December 1, 2012). World Bank Policy Research Working Paper No. 6288. Available at SSRN: https://ssrn.com/abstract=2188801

James R. Barth

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States
334-844-2469 (Phone)
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Milken Institute ( email )

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Gerard Caprio

Williams College ( email )

Williamstown, MA 01267
United States
413-597-2465 (Phone)
413-597-4045 (Fax)

Ross Eric Levine

University of California, Berkeley - Haas School of Business ( email )

545 Student Services Building, #1900
2220 Piedmont Avenue
Berkeley, CA 94720
United States

National Bureau of Economic Research (NBER)

1050 Massachusetts Avenue
Cambridge, MA 02138
United States

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