Is One Watchdog Better Than Three? International Experience with Integrated Financial Sector Supervision
IMF Working Papers, March 1, 2006
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- Is One Watchdog Better Than Three? International Experience with Integrated Financial Sector Supervision
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Bibliographic details
- Authors: Martin Cihak, Richard Podpiera
- Published: March 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451863178.001
Overview
- Authors: Martin Cihak, Richard Podpiera
- Date: March 1, 2006
- Type: IMF Working Paper
- Core focus: Review of international experience with integrated supervision of banks, nonbank financial institutions, and securities markets; survey of theoretical arguments for and against integrated supervisory model; empirical assessment using data on compliance with international standards.
Key findings
- The paper finds that (i) full 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; and (ii) fully integrated supervision is not associated with a significant reduction in supervisory staff.
- Observed trend: Over the past two decades, there has been a clear trend toward integrating the regulation and supervision of banks, nonbank financial institutions, and securities markets.
Scope, data, and approach
- Surveys theoretical arguments for and against the integrated supervisory model.
- Uses data on compliance with international standards to assess validity of theoretical arguments.
Policy-relevant implications (as reflected in the paper)
- Integration of supervisory functions can improve the quality of supervision for insurance and securities sectors.
- Integration can promote greater consistency of supervision across financial sectors.
- Full integration does not necessarily yield reductions in supervisory headcount.