Document Type

Article

Source Publication

Journal of Banking & Finance

Publication Date

8-2013

Volume

37

Issue

8

First Page

2879

Last Page

2892

Publisher

Elsevier

Keywords

Bank regulation; Supervision; Operating efficiency

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, Barth et al., 2006 and Barth et al., 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.

DOI

10.1016/j.jbankfin.2013.04.030

Scopus EID

https://www.scopus.com/inward/record.uri?eid=2-s2.0-84878635228&doi=10.1016%2fj.jbankfin.2013.04.030&partnerID=40&md5=984ada2b9b5f4e03dd3eff5682b82ae4

Print ISSN

03784266

E-ISSN

18726372

Full-text Version

Accepted Author Manuscript

Recommended Citation

Barth, J. R., Lin, C., Ma, Y., Seade, J., & Song, F. M. (2013). Do bank regulation, supervision and monitoring enhance or impede bank efficiency? Journal of Banking & Finance, 37(8), 2879-2892. doi: 10.1016/j.jbankfin.2013.04.030

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