The Economic Crisis: Did Financial Supervision Matter?
November 1, 2011
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Summary
The Asian financial crisis marked the beginning of worldwide efforts to improve the effectiveness of financial supervision. However, the crisis that started in 2007?08 was a crude awakening: several of these improvements seemed unable to avoid or mitigate the crisis. This paper brings the first systematic analysis of the role of two of these efforts - modifications in the architecture of financial supervision and in supervisory governance - and concludes that they were negatively correlated with economic resilience. Using the emerging distinction between macro- and micro-prudential supervision, we explore to what extent two separate institutions would allow for more checks and balances to improve supervisory governance and, thus, reduce the probability of supervisory failure.
Subject: Bank supervision, Banking, Basel Core Principles, Economic sectors, Financial crises, Financial regulation and supervision, Public sector, Tax incentives
Keywords: Bank supervision, banking industry, Basel Core Principles, central bank involvement, degree of supervision unification, Europe, financial supervision, Global, global crisis, governance arrangement, governance indicator, governance work, involvement in supervision, macroprudential supervision, proactive supervision, prudential supervision, Public sector, supervision unification, supervisory architecture, supervisory governance, WP
Pages:
47
Volume:
2011
DOI:
Issue:
261
Series:
Working Paper No. 2011/261
Stock No:
WPIEA2011261
ISBN:
9781463924560
ISSN:
1018-5941
