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Bank Safety and Soundness and the Structure of Bank Supervision: A Cross‐Country Analysis
Author(s) -
Barth James R.,
Dopico Luis G.,
Nolle Daniel E.,
Wilcox James A.
Publication year - 2002
Publication title -
international review of finance
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.489
H-Index - 18
eISSN - 1468-2443
pISSN - 1369-412X
DOI - 10.1111/j.1369-412x.2002.00037.x
Subject(s) - business , soundness , market liquidity , financial system , banking industry , central bank , capital (architecture) , capital adequacy ratio , transition countries , emerging markets , capital structure , monetary economics , accounting , finance , economics , international economics , market economy , monetary policy , philosophy , linguistics , archaeology , incentive , debt , history
Two central questions about the structure of bank supervision are whether central banks should supervise banks and whether to have multiple supervisors. We use data for 70 countries across developed, emerging and transition economies to estimate statistical connections between banking performance, the structure of bank supervision, permissible banking activities, legal environments, banking market structure and macroeconomic conditions. We find that where central banks supervise banks, banks tend to have more non‐performing loans. Countries with multiple supervisors have lower capital ratios and higher liquidity risk. We also find that conclusions from non‐transition economies may not necessarily apply to transition economies.