The Economic Crisis: Did Financial Supervision Matter?

Author/Editor:

Marc G Quintyn ; Rosaria Vega Pansini ; Donato Masciandaro

Publication Date:

November 1, 2011

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:

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.

Series:

Working Paper No. 2011/261

Subject:

Bank supervision Banking Basel Core Principles Economic sectors Financial crises Financial regulation and supervision Public sector Tax incentives

Frequency:

Biannually

English

Publication Date:

November 1, 2011

ISBN/ISSN:

9781463924560/1018-5941

Stock No:

WPIEA2011261

Pages:

47

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