Bank regulation and supervision in 180 countries from 1999 to 2011

TLDR

The paper aims to present new data and measures of bank regulatory and supervisory policies across 180 countries from 1999 to 2011, enabling policymakers and researchers to compare and analyze policy changes over time. The authors quantify hundreds of regulatory questions—covering permissible activities, capital requirements, supervisory powers, disclosure, governance, deposit insurance, entry barriers, and loan provisioning—to construct indices of key policies, validate responses with multiple checks, and provide a database for statistical analysis of effective regulatory regimes. Regulation and supervision of banks vary widely across countries, and there has been no convergence in regulatory regimes over the past decade despite the severe global financial crisis. The survey‑based data require accurate responses, so the authors performed multiple checks to improve reliability.

Abstract

Purpose The purpose of this paper is to discuss and provide new data and measures of bank regulatory and supervisory policies in 180 countries from 1999 to 2011. Design/methodology/approach The authors' approach is based upon the quantification of hundreds of questions, including information on permissible bank activities, capital requirements, the powers of official supervisory agencies, information disclosure requirements, external governance mechanisms, deposit insurance, barriers to entry, and loan provisioning, to form indices of key bank regulatory and supervisory policies. Findings It is found that the regulation and supervision of banks varies widely across countries in many different dimensions. Furthermore, there has not been a convergence in bank regulatory regimes over the past decade despite the worst global financial crisis since the Great Depression. Research limitations/implications The data are based on survey responses and this requires that the answers be accurate. To better ensure this is the case, several checks were made to ensure greater accuracy in all the answers. Using this database one can perform various statistical analyses in attempt to determine which bank regulatory regimes work best to promote well‐functioning banking systems. Originality/value The authors' data and measures are new and unique so as enable policy makers and researchers to examine cross‐country comparisons and analyses of changes in banking policies over time.