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Prudential Regulation and Supervision of the Banking Sector and Banking Crises: A Cross Country Empiricial Investigation

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  • Aytül Ganioglu

Abstract

The main purpose in this study is to see empirically whether there really exists a clear association between weaknesses in the regulation and supervision of the banking sector and banking crises. Test results indicate that capital regulations are a major factor in the prevention of crises, giving important support to the propositions towards ensuring higher capital requirements. However, tighter capital regulations do not seem to mitigate the negative impact of moral hazard problem generated by generous deposit insurance system. While inflation has a significant role in the generation of crisis, its significance weakens to a major extent, when accompanied with regulatory and supervisory factors. Hence, the significance of regulatory and supervisory framework of the banking system is once more justified.

Suggested Citation

  • Aytül Ganioglu, 2007. "Prudential Regulation and Supervision of the Banking Sector and Banking Crises: A Cross Country Empiricial Investigation," Journal of BRSA Banking and Financial Markets, Banking Regulation and Supervision Agency, vol. 1(2), pages 11-30.
    • Handle: RePEc:bdd:journl:v:1:y:2007:i:2:p:11-30
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    References listed on IDEAS

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    1. Jenny Corbett & Gregor Irwin & David Vines, 1999. "From Asian Miracle to Asian Crisis: Why Vulnerability, Why Collapse?," RBA Annual Conference Volume (Discontinued), in: David Gruen & Luke Gower (ed.),Capital Flows and the International Financial System, Reserve Bank of Australia.
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    More about this item

    Keywords

    Banking Regulation and Supervision; Banking Crisis.;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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