Basel Core Principles and Bank Risk: Does Compliance Matter?

Author/Editor:

Asli Demirgüç-Kunt ; Enrica Detragiache

Publication Date:

March 1, 2010

Electronic Access:

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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:

This paper studies whether compliance with the Basel Core Principles for effective banking supervision (BCPs) is associated with bank soundness. Using data for over 3,000 banks in 86countries, we find that neither the overall index of BCP compliance nor its individual components are robustly associated with bank risk measured by Z-scores. We also fail to find a relationship between BCP compliance and systemic risk measured by a system-wide Zscore.

Series:

Working Paper No. 2010/081

Subject:

Bank regulation Bank soundness Banking Basel Core Principles Commercial banks

English

Publication Date:

March 1, 2010

ISBN/ISSN:

9781451982671/1018-5941

Stock No:

WPIEA2010081

Pages:

27

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