Financial governance of banking supervision

Donato Masciandaro (), María Nieto () and Henriëtte Prast ()
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Donato Masciandaro: University of Bocconi - Department of Economics (DEP)
María Nieto: Banco de España
Henriëtte Prast: de Nederlandsche Bank (Netherlands Central Bank)

No 725, Banco de España Working Papers from Banco de España

Abstract: This article analyses the economics of financing banking supervision and attempts to respond to two questions: What are the most common financing practices? Can the differences in current financing practices be explained by country specific factors? We perform an empirical analysis that identifies the determinants of the financing structure of banks´ prudential supervision using a sample of 90 banking supervisors (central banks and financial authorities). We conclude that supervisors in central banks are more likely publicly funded, while financial authorities are more likely funded via a levy on the regulated banks. The financing rule is also explained by the structure of the financial systems. Public funding is more likely in bank oriented structures. Finally, the geographical factor is also significant: European bank supervisors are more oriented towards the private funding regime. In general, we do not find evidence of the role of the political factor, the size of the economy, the level of development and the legal tradition.

Keywords: banking supervision; budgetary governance; central banks; financial authorities (search for similar items in EconPapers)
JEL-codes: D78 G21 G28 O17 P16 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ban and nep-cfn
Date: 2007-07
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Persistent link: http://EconPapers.repec.org/RePEc:bde:wpaper:0725

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