Analyzing the Topography of Financial Regulation
Journal of Financial Economic Policy, 2009
Posted: 9 Oct 2017
Date Written: October 7, 2017
Purpose This study assesses the topography of financial regulation, supervisory styles, and performance of banking systems across the world.
Design/methodology/approach I gain insights by comparing regulatory and supervisory practices and their impact on banking system performance before and after the global crisis. The study illustrates the differences in regulation/supervision among crisis, non-crisis, and BRICS countries. Even as capital ratios increased, bank governance and resolution regimes were strengthened private sector incentives to monitor banks deteriorated.
Findings The results show that the crisis-countries had weaker regulatory and supervisory frameworks than those in emerging countries during the crisis period. BRICS countries as a distinct block have demonstrated uniqueness in their regulatory/supervisory styles that are neither similar to those in the crisis-countries nor to those in the non-crisis countries.
Originality/value The originality of this study lies in its unique approach to assessing the bank regulation and supervision styles around the world and their impact on banking system profitability as it employs a robust database. Further, this study provides not only a general assessment but also for BRICS and emerging economies. Regulatory agencies around the world would greatly benefit from systematic evidence on the relationship between bank performance and regulatory/supervisory systems.
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