{
  "title": "Banking on the Principles: Compliance with Basel Core Principles and Bank Soundness",
  "publication": "IMF Working Papers, October 1, 2006",
  "sourceUrl": "https://www.imf.org/en/publications/wp/issues/2016/12/31/banking-on-the-principles-compliance-with-basel-core-principles-and-bank-soundness-19932",
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  "summary": "This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCPs) improves bank soundness.",
  "sections": [
    {
      "heading": "Summary findings",
      "content": "- The paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCPs) improves bank soundness.\n- There is a significant and positive relationship between bank soundness (measured with Moody's financial strength ratings) and compliance with principles related to information provision.\n- Countries that require banks to regularly and accurately report their financial data to regulators and market participants have sounder banks.\n- The relationship is robust to controlling for:\n  - broad indexes of institutional quality,\n  - macroeconomic variables,\n  - sovereign ratings,\n  - reverse causality.\n- Measuring soundness through Z-scores yields similar results.\n- Implication: transparency is important for making supervisory processes effective and strengthening market discipline."
    },
    {
      "heading": "Policy recommendations",
      "content": "- Countries aiming to upgrade banking regulation and supervision should consider giving priority to information provision over other elements of the core principles."
    },
    {
      "heading": "Methodology and measures (as reported)",
      "content": "- Bank soundness measured with Moody's financial strength ratings.\n- Alternative soundness measure: Z-scores (yields similar results)."
    },
    {
      "heading": "Publication and metadata",
      "content": "- Authors: Enrica Detragiache, Thierry Tressel, Asli Demirgüç-Kunt\n- Publication date: October 1, 2006\n- Series: Working Paper No. 2006/242\n- Issue: 242\n- Volume: 2006\n- Pages: 33\n- DOI: https://doi.org/10.5089/9781451865028.001\n- ISBN: 9781451865028\n- ISSN: 1018-5941\n- Subjects: Bank regulation, Bank soundness, Bank supervision, Banking, Basel Core Principles\n- Keywords: bank, country, WP\n\nContent synthesized from the IMF web landing page for \"Banking on the Principles: Compliance with Basel Core Principles and Bank Soundness.\"\n\n---\n\n Content in this bundle\n\n- wp06242\n  - wp06242 (Markdown version){rel=\"alternate\" type=\"text/markdown\"}\n  - wp06242 (PDF){rel=\"external\" type=\"application/pdf\"}\n\n---\n\nSource: https://www.imf.org/en/publications/wp/issues/2016/12/31/banking-on-the-principles-compliance-with-basel-core-principles-and-bank-soundness-19932"
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    "Authors: Enrica Detragiache, Thierry Tressel, Asli Demirgüç-Kunt",
    "Published: October 1, 2006",
    "Series: IMF Working Papers",
    "DOI: https://doi.org/10.5089/9781451865028.001",
    "The paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCPs) improves bank soundness.",
    "There is a significant and positive relationship between bank soundness (measured with Moody's financial strength ratings) and compliance with principles related to information provision.",
    "Countries that require banks to regularly and accurately report their financial data to regulators and market participants have sounder banks.",
    "The relationship is robust to controlling for:",
    "Measuring soundness through Z-scores yields similar results.",
    "Implication: transparency is important for making supervisory processes effective and strengthening market discipline.",
    "Countries aiming to upgrade banking regulation and supervision should consider giving priority to information provision over other elements of the core principles.",
    "Bank soundness measured with Moody's financial strength ratings.",
    "Alternative soundness measure: Z-scores (yields similar results).",
    "Authors: Enrica Detragiache, Thierry Tressel, Asli Demirgüç-Kunt",
    "Publication date: October 1, 2006",
    "Series: Working Paper No. 2006/242",
    "Issue: 242",
    "Volume: 2006",
    "Pages: 33",
    "DOI: https://doi.org/10.5089/9781451865028.001",
    "ISBN: 9781451865028",
    "ISSN: 1018-5941",
    "Subjects: Bank regulation, Bank soundness, Bank supervision, Banking, Basel Core Principles",
    "Keywords: bank, country, WP",
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