Does Compliance with Basel Core Principles Bring Any Measurable Benefits?

November 1, 2004

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

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.

Subject: Bank regulation, Bank supervision, Basel Core Principles, Commercial banks, Estimation techniques, Financial institutions, Financial regulation and supervision, Nonperforming loans

Keywords: Bank regulation, Bank supervision, banking, banking sector performance, Basel Core Principles, BCP assessment, BCP compliance, BCP noncompliance indicator, Commercial banks, interest margin, loan, nonperforming loans, performing loan, ratio, WP

Pages:
20
Volume:
2004
DOI:
https://doi.org/10.5089/9781451874532.001
Issue:
204
Series:
Working Paper No. 2004/204
Stock No:
WPIEA2042004
ISBN:
9781451874532
ISSN:
1018-5941

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