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Does Regulatory Governance Matter for Financial System Stability? An Empirical Analysis

Udaibir S Das, Marc Quintyn and Kina Chenard

No 04/89, IMF Working Papers from International Monetary Fund

Abstract: This paper provides empirical evidence that the quality of regulatory governance-governance practices adopted by financial system regulators and supervisors-matters for financial system soundness. The paper constructs indices of financial system soundness and regulatory governance, based on country data collected from the Financial Sector Assessment Program (FSAP). Regression results indicate that regulatory governance has a significant influence on financial system soundness, along with variables reflecting macroeconomic conditions, the structure of the banking system, and the quality of political institutions and public sector governance. The results also indicate that good public sector governance amplifies the impact of regulatory governance on financial system soundness.

Keywords: Financial regulation and supervision; Financial stability; Governance; Transparency; Institutions, financial regulation, supervision, financial system, banking, financial sector, banking system, Capitalist Systems: Political Economy, Financial Institutions and Services: Government Policy and Regulation, Positive Analysis of Policy-Making and Implementation, (search for similar items in EconPapers)
Pages: 43
Date: 2004-05-01
New Economics Papers: this item is included in nep-fin, nep-fmk and nep-reg
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Handle: RePEc:imf:imfwpa:04/89