Does Compliance with Basel Core Principles Bring Any Measurable Benefits?

Podpiera, Richard

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Does Compliance with Basel Core Principles Bring Any Measurable Benefits?

IMF Working Paper No. 04/204

21 Pages Posted: 9 Feb 2006

See all articles by Richard Podpiera

Richard Podpiera

International Monetary Fund (IMF); Charles University in Prague - CERGE-EI, a joint workplace of Charles University and the Economics Institute of the Czech Academy of Sciences

Date Written: November 2004

Abstract

We explore the relationship between banking sector performance and the quality of regulation and supervision as measured by compliance with the Basel Core Principles for Effective Banking Supervision (BCP). Using BCP assessment results for 65 countries and 1998-2002 panel data for other variables, we find a significant positive impact of higher compliance with BCP on banking sector performance, as measured by nonperforming loans and net interest margin, after controlling for the level of development of the economy and the financial system and macroeconomic and structural factors.

Keywords: Basel Core Principles, banking, nonperforming loans, interest margin

JEL Classification: G21, G28

Suggested Citation: Suggested Citation

Podpiera, Richard, Does Compliance with Basel Core Principles Bring Any Measurable Benefits? (November 2004). IMF Working Paper No. 04/204, Available at SSRN: https://ssrn.com/abstract=879029