The Regulation and Supervision of Banks Around the World: A New Database

University of Minnesota Financial Studies Working Paper No. 0006; World Bank Policy Research Working Paper No. 2588

88 Pages Posted: 10 Apr 2001

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: February 2001

Abstract

This new and comprehensive database on the regulation and supervision of banks in 107 countries should better inform advice about bank regulation and supervision and lower the marginal cost of empirical research.

International consultants on bank regulation and supervision for developing countries often base their advice on how their home country does things, for lack of information on practice in other countries. Recommendations for reform have tended to be shaped by bias rather than facts.

To better inform advice about bank regulation and supervision and to lower the marginal cost of empirical research, Barth, Caprio, and Levine present and discuss a new and comprehensive database on the regulation and supervision of banks in 107 countries. The data, based on surveys sent to national bank regulatory and supervisory authorities, are now available to researchers and policymakers around the world.

The data cover such aspects of banking as entry requirements, ownership restrictions, capital requirements, activity restrictions, external auditing requirements, characteristics of deposit insurance schemes, loan classification and provisioning requirements, accounting and disclosure requirements, troubled bank resolution actions, and (uniquely) the quality of supervisory personnel and their actions.

The database permits users to learn how banks are currently regulated and supervised, and about bank structures and deposit insurance schemes, for a broad cross-section of countries.

In addition to describing the data, Barth, Caprio, and Levine show how variables may be grouped and aggregated. They also show some simple correlations among selected variables.

In a companion paper ("Bank Regulation and Supervision: What Works Best") studying the relationship between differences in bank regulation and supervision and bank performance and stability, they conclude that: - Countries with policies that promote private monitoring of banks have better bank performance and more stability. Countries with more generous deposit insurance schemes tend to have poorer bank performance and more bank fragility. - Diversification of income streams and loan portfolios - by not restricting bank activities - also tends to improve performance and stability. (This works best when an active securities market exists.) Countries in which banks are encouraged to diversify their portfolios domestically and internationally suffer fewer crises.

This paper - a product of Finance, Development Research Group, and the Financial Sector Strategy and Policy Department - is part of a larger effort in the Bank to compile data on financial regulation and supervision and the advise countries on what works best. The study was funded by the Bank's Research Support Budget under the research project "Bank Regulation and Supervision: What Works and What Does Not."

JEL Classification: G18, G38, G21

Suggested Citation

Barth, James R. and Caprio, Gerard and Levine, Ross Eric, The Regulation and Supervision of Banks Around the World: A New Database (February 2001). University of Minnesota Financial Studies Working Paper No. 0006; World Bank Policy Research Working Paper No. 2588. Available at SSRN: https://ssrn.com/abstract=262317

James R. Barth

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States
334-844-2469 (Phone)
334-844-4960 (Fax)

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States

Gerard Caprio

Williams College ( email )

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

Ross Eric Levine (Contact Author)

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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