Enhancing Bank Supervision in Asia: Lessons Learned from the Financial Crisis

Michael Zamorski and Minsoo Lee

No 443, ADB Economics Working Paper Series from Asian Development Bank

Abstract: The global financial crisis underlined that sound and effective bank regulation is vital to financial stability. Assessments of the global financial crisis invariably point to ineffective finance regulation and supervision as the main reasons for the onset of the crisis and its severity. In particular, lapses in banking regulation contributed significantly to the outbreak. The crisis reflected the failure of regulatory authorities to keep pace with financial innovation. Bank supervision had been weak by any measure. Supervisors did not conduct regular onsite bank inspections or examinations of sufficient depth. They did not properly implement risk-based supervision, and they failed to identify shortcomings in banks’ risk-management methods, governance structures, and risk cultures. Meanwhile, offsite surveillance systems rely too heavily on banks’ self-reported data to effectively monitor risk. Banking regulation is the primary safeguard against financial instability, but it should be supplemented by macroprudential policies and other new policy instruments now available to regulatory authorities.

Keywords: Basel Committee’s core principles; finance regulation and supervision; global financial crisis; macroprudential policy (search for similar items in EconPapers)
JEL-codes: G01 G18 G21 G28 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2015-08-12
New Economics Papers: this item is included in nep-ban, nep-cba, nep-fmk and nep-sea
References: Add references at CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.adb.org/publications/enhancing-bank-sup ... ned-financial-crisis Full text (application/pdf)

Related works:
Working Paper: Enhancing Bank Supervision in Asia: Lessons Learnt from the Financial Crisis (2015)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:ris:adbewp:0443

Access Statistics for this paper

More papers in ADB Economics Working Paper Series from Asian Development Bank 6 ADB Avenue, Mandaluyong City, 1550 Metro Manila, Philippines. Contact information at EDIRC.
Bibliographic data for series maintained by Orlee Velarde ().