Are More Integrated Prudential Supervision Agencies Characterized By Better Regulation and Supervision?

29 Pages Posted: 7 Jul 2007

See all articles by Richard Podpiera

Richard Podpiera

International Monetary Fund (IMF); Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute)

Martin Čihák

International Monetary Fund (IMF)

Date Written: July 5, 2007

Abstract

Over the past two decades, there has been a clear trend in many countries toward integrating the prudential regulation and supervision of banks, nonbank financial institutions, and securities markets in a single national agency. This paper reviews the international experience with integrated supervisory agencies, using data on compliance with international standards to approximate quality of regulation and supervision. We find that integration is associated with higher quality of supervision in insurance and securities and greater consistency of supervision across sectors, after controlling for the level of development. Also, we find that whether supervision is located inside our outside the central bank does not have a significant relationship to the quality of supervision, other things being equal. Our results are robust with respect to different definitions of integration. In particular, they do not change qualitatively whether we compare fully integrated supervisory agencies with other supervisory frameworks, or whether we use an index distinguishing different degrees of supervisory integration.

Keywords: financial services regulation, prudential supervision, supervisory agencies, integrated supervision

JEL Classification: G18, G28, K20, L50

Suggested Citation

Podpiera, Richard and Cihak, Martin, Are More Integrated Prudential Supervision Agencies Characterized By Better Regulation and Supervision? (July 5, 2007). 2nd Annual Conference on Empirical Legal Studies Paper. Available at SSRN: https://ssrn.com/abstract=998624 or http://dx.doi.org/10.2139/ssrn.998624

Richard Podpiera

International Monetary Fund (IMF) ( email )

700 19th Street NW
Washington, DC 20431
United States

Charles University in Prague - CERGE-EI (Center for Economic Research and Graduate Education - Economics Institute) ( email )

P.O. Box 882
7 Politickych veznu
Prague 1, 111 21
Czech Republic
+42 02 240 05 242 (Phone)
+42 02 242 27 143 (Fax)

HOME PAGE: http://www.cerge-ei.cz

Martin Cihak (Contact Author)

International Monetary Fund (IMF) ( email )

700 19th Street N.W.
Washington, DC 20431
United States

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