The Economic Crisis: Did Financial Supervision Matter?

Marc Quintyn, Rosaria Vega Pansini and Donato Masciandaro ()

No 2011/261, IMF Working Papers from International Monetary Fund

Abstract: The Asian financial crisis marked the beginning of worldwide efforts to improve the effectiveness of financial supervision. However, the crisis that started in 2007?08 was a crude awakening: several of these improvements seemed unable to avoid or mitigate the crisis. This paper brings the first systematic analysis of the role of two of these efforts - modifications in the architecture of financial supervision and in supervisory governance - and concludes that they were negatively correlated with economic resilience. Using the emerging distinction between macro- and micro-prudential supervision, we explore to what extent two separate institutions would allow for more checks and balances to improve supervisory governance and, thus, reduce the probability of supervisory failure.

Keywords: WP; governance arrangement; central bank involvement; prudential supervision; supervision unification; supervisory governance; financial supervision; global crisis; supervisory architecture; macroprudential supervision; proactive supervision; involvement in supervision; banking industry; degree of supervision unification; governance indicator; governance work; Bank supervision; Basel Core Principles; Public sector; Europe; Global (search for similar items in EconPapers)
Pages: 47
Date: 2011-11-01
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Citations: View citations in EconPapers (34)

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