E-Book Overview
This volume assembles and presents a new database on bank regulation in over 150 countries (included also on CD). It offers the first comprehensive cross-country assessment of the impact of bank regulation on the operation of banks, and assesses the validity of the Basel Committee's influential approach to bank regulation. The treatment also provides an empirical evaluation of the historic debate about the proper role of government in the economy by studying bank regulation and analyzes the role of politics in determining regulatory approaches to banking. The data also indicate that restrictions on the entry of new banks, government ownership of banks, and restrictions on bank activities hurt banking system performance. The authors find that domestic political factors shape both regulations and their effectiveness.
E-Book Content
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CB999/Barth
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October 25, 2005
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P1: JtR 0521855764pre
CB999/Barth
0 521 85576 4
October 25, 2005
14:31
Rethinking Bank Regulation
Banking systems are important not only for countries’ finances but also to help spur economic growth. This volume presents and discusses a new database on bank regulation in more than 150 countries. It offers the first comprehensive cross-country assessment of the impact of bank regulation on the operation of banks and assesses the validity of the Basel Committee’s influential approach to bank regulation. A key finding is that societies that emphasize marketbased monitoring of banks enjoy superior outcomes along a range of criteria. Viewing the reform of bank regulation and supervision as a narrow technical issue is risky because the impact of bank regulation reflects host countries’ complex economic and political institutions. The data also indicate that restrictions on the entry of new banks, government ownership of banks, and restrictions on bank activities adversely affect banking system performance. James R. Barth is the Lowder Eminent Scholar in Finance at Auburn University and a Senior Finance Fellow at the Milken Institute. He also has been Professor of Economics at George Washington University, Associate Director of the economics program at the National Science Foundation, and Shaw Foundation Professor of Banking and Finance at Nanyang Technological University. Professor Barth was an appointee of Presidents Ronald Reagan and George H. W. Bush as Chief Economist of the Office of Thrift Supervision and previously as Chief Economist of the Federal Home Loan Bank Board. His research focuses on financial institutions and capital markets, both domestic and global, with special emphasis on regulatory issues. Gerard Caprio, Jr., is Professor of Economics at Williams College and, until January 2006, the Director for Policy in the Financial Sector Vice Presidency of the World Bank. He previously served as Manager, Financial Sector Research, in the Bank’s Development Research Group and was the senior Bank spokesperson on financial sector issues. Before joining the Bank in 1988, Professor Caprio was Vice President and Head of Global Economics at JP Morgan, previously serving as an economist at the Federal Reserve Board and the IMF and also teaching at George Washington University. His current research explores the links between financial sector regulation and supervision and the performance of financial institutions, as well as financial crises. Ross Levine is the Harrison S. Kravis University Professor and Professor of Economics at Brown University. He is also a Research Associate at the National Bureau of Economic Research and the Dupee Faculty Fellow at the Watson Institute of International Affairs. After receiving his Ph.D. in economics and working at the Board of Governors of the Federal Reserve S