Does Regulatory Governance Matter for Financial System Stability? An Empirical Analysis

This paper provides empirical evidence that the quality of regulatory governance-governance practices adopted by financial system regulators and supervisors-matters for financial system soundness. The paper constructs indices of financial system soundness and regulatory governance, based on country data collected from the Financial Sector Assessment Program (FSAP). Regression results indicate that regulatory governance has a significant influence on financial system soundness, along with variables reflecting macroeconomic conditions, the structure of the banking system, and the quality of political institutions and public sector governance. The results also indicate that good public sector governance amplifies the impact of regulatory governance on financial system soundness.Governance;Financial stability;Financial systems;Bank supervision;Economic models;financial system, banking, financial sector, banking system, financial strength, banking sector, financial institutions, financial policies, banking supervision, financial instability, capital adequacy, bank for international settlements, financial markets, banking crises, bank of canada, central banking, international standards, financial fragility, financial intermediation, financial regulation, financial market, bank of international settlements, bank performance, bank credit, asset diversification, moral hazard, international country risk guide, bank regulation, banking systems, financial liberalization, banking regulation, bank governors, banking risks, bank of indonesia, internal audit, financial regulations, prudential regulation, repressed financial systems, banking supervisors, country comparison, net interest margin, bank risk taking, bank fragility, bank failure, banking sectors, foreign exchange, bank data, financial statements, bank governance, capital adequacy ratio, bank risk, financial risk, international finance, financial structures, bank profitability, banking crisis, international financial system, bank of england, financial structure, bank policy, bank assets, bank ratings, consolidated supervision, financial services

Will they sing the same tune? Measuring convergence in the new European system of financial supervisors

The impact of the current financial crisis on EU members has introduced a sense of urgency to the coordination/centralization of financial supervision debate. This CEPR Policy Insight on the micro-prudential supervisory framewor