Do bank regulation, supervision and monitoring enhance or impede bank efficiency?

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal

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Author(s)

  • James R. Barth
  • Chen Lin
  • Yue Ma
  • Jesús Seade
  • Frank M. Song

Related Research Unit(s)

Detail(s)

Original languageEnglish
Pages (from-to)2879-2892
Journal / PublicationJournal of Banking and Finance
Volume37
Issue number8
Publication statusPublished - Aug 2013

Abstract

The recent global financial crisis has spurred renewed interest in identifying those reforms in bank regulation that would work best to promote bank development, performance and stability. Building upon three recent world-wide surveys on bank regulation (Barth et al., 2004, 2006, 2008), we contribute to this assessment by examining whether bank regulation, supervision and monitoring enhance or impede bank operating efficiency. Based on an un-balanced panel analysis of 4050 banks observations in 72 countries over the period 1999-2007, we find that tighter restrictions on bank activities are negatively associated with bank efficiency, while greater capital regulation stringency is marginally and positively associated with bank efficiency. We also find that a strengthening of official supervisory power is positively associated with bank efficiency only in countries with independent supervisory authorities. Moreover, independence coupled with a more experienced supervisory authority tends to enhance bank efficiency. Finally, market-based monitoring of banks in terms of more financial transparency is positively associated with bank efficiency. © 2013 Elsevier B.V.

Research Area(s)

  • Bank regulation, Operating efficiency, Supervision

Citation Format(s)

Do bank regulation, supervision and monitoring enhance or impede bank efficiency? / Barth, James R.; Lin, Chen; Ma, Yue; Seade, Jesús; Song, Frank M.

In: Journal of Banking and Finance, Vol. 37, No. 8, 08.2013, p. 2879-2892.

Research output: Journal Publications and Reviews (RGC: 21, 22, 62)21_Publication in refereed journal