Banking Structure and Regulation in 1993 and 2013: A Cross-Country Comparison

41 Pages Posted: 18 Jun 2014

See all articles by James R. Barth

James R. Barth

Auburn University; Milken Institute

Daniel E. Nolle

affiliation not provided to SSRN

Apanard Penny Prabha

University of Illinois at Springfield

Date Written: June 16, 2014

Abstract

After two decades of extreme turbulence in banking and financial markets around the world, it is reasonable to ask about the current status of banking regulation and supervision. Our unique starting point for answering that question comes from the fact that 20 years ago we developed the first detailed, multi-country database on banking regulation and supervision. We now compare that 1993 data – the oldest of its kind available – for 19 developed market economies to similar data from the most recent (2011-2012) World Bank survey on banking supervision and regulation. Key observations emerging from our intertemporal cross-country analysis include the following: (1) The very largest banks retain the same kind of dominance in 2011 as they did 20 years ago (before the continued occurrence of ever-more serious financial crises). (2) In the case of some basic banking activities, including funding practices, the nature of systemic risks seems to have remained the same, if not worsened, over time. (3) In at least one respect – scope of coverage – deposit insurance schemes have changed in a way that encourages moral hazard behavior. These observations suggest that there is much more work to be done to address banking risks, starting with the collection and analysis of additional data to help us understand how well banking policies and practices are succeeding around the world.

Keywords: Bank regulation, capital requirements, deposit insurance, restrictions on bank activities, banking supervision

JEL Classification: G20, G28

Suggested Citation

Barth, James R. and Nolle, Daniel E. and Prabha, Apanard Penny, Banking Structure and Regulation in 1993 and 2013: A Cross-Country Comparison (June 16, 2014). Available at SSRN: https://ssrn.com/abstract=2452130 or http://dx.doi.org/10.2139/ssrn.2452130

James R. Barth

Auburn University ( email )

415 West Magnolia Avenue
Auburn, AL 36849
United States
334-844-2469 (Phone)
334-844-4960 (Fax)

Milken Institute ( email )

1250 Fourth Street
Santa Monica, CA 90401
United States

Daniel E. Nolle

affiliation not provided to SSRN

Apanard Penny Prabha (Contact Author)

University of Illinois at Springfield ( email )

Springfield, IL 62703
United States

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