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Confronting divergent interests in cross-country regulatory arrangements

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  • Edward J. Kane

    (Reserve Bank of New Zealand)

Abstract

This article was prepared by Professor Kane for a public lecture while he was the Professorial Fellow of Monetary and Financial Economics at Victoria University in 2005. Prudential regulation seeks to assure the safety and soundness of the financial sector. The article considers the regulation of banks operating in both Australia and New Zealand. It discusses differences in the regulatory cultures of the two countries, and identifies preconditions for arriving at a fair and harmonised system of regulation. A harmonised regulatory regime is one that maximises the welfare of the citizens across countries, rather than simply blending together two national regulatory regimes. The article stresses the importance of proper processes for the resolution of incentive conflicts between countries that may arise in regulation and crisis situations.

Suggested Citation

  • Edward J. Kane, 2006. "Confronting divergent interests in cross-country regulatory arrangements," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 69, pages 1-12., June.
    • Handle: RePEc:nzb:nzbbul:june2006:2
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    References listed on IDEAS

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    1. Gerard Caprio & Patrick Honohan, 2008. "Banking Crises," Center for Development Economics 2008-09, Department of Economics, Williams College.
    2. Geof Mortlock, 2003. "Summary of a new Reserve Bank of New Zealand paper: Overview of New Zealand financial sector regulation," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 66, pages 1-1, September.
    3. Peter Ledingham, 1995. "The review of bank supervision arrangements in New Zealand: the main elements of the debate," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 58, September.
    4. Altunbas, Yener & Marqués, David, 2008. "Mergers and acquisitions and bank performance in Europe: The role of strategic similarities," Journal of Economics and Business, Elsevier, vol. 60(3), pages 204-222.
    5. Honohan, Patrick & Klingebiel, Daniela, 2003. "The fiscal cost implications of an accommodating approach to banking crises," Journal of Banking & Finance, Elsevier, vol. 27(8), pages 1539-1560, August.
    6. Philippe Aghion, Patrick Bolton & Steven Fries, 1999. "Optimal Design of Bank Bailouts: The Case of Transition Economies," Journal of Institutional and Theoretical Economics (JITE), Mohr Siebeck, Tübingen, vol. 155(1), pages 1-51, March.
    7. Schüler, Martin, 2003. "Incentive Problems in Banking Supervision: The European Case," ZEW Discussion Papers 03-62, ZEW - Leibniz Centre for European Economic Research.
    8. Geof Mortlock, 2003. "New Zealand's financial sector regulation," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 66, December.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Robert A. Eisenbeis, 2007. "Home Country Versus Cross-Border Negative Externalities in Large Banking Organization Failures and How to Avoid them," World Scientific Book Chapters, in: Douglas D Evanoff & George G Kaufman & John R LaBrosse (ed.), International Financial Instability Global Banking and National Regulation, chapter 13, pages 181-200, World Scientific Publishing Co. Pte. Ltd..
    2. Edward J. Kane, 2016. "A Theory of How and Why Central-Bank Culture Supports Predatory Risk-Taking at Megabanks," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 44(1), pages 51-71, March.
    3. International Monetary Fund, 2006. "Euro Area Policies: Selected Issues," IMF Staff Country Reports 2006/288, International Monetary Fund.
    4. Marcelo Rezende, 2011. "How do joint supervisors examine financial institutions? the case of state banks," Finance and Economics Discussion Series 2011-43, Board of Governors of the Federal Reserve System (U.S.).
    5. Marcelo Rezende, 2011. "How Do Joint Supervisors Examine Financial Institutions? The Case of Banks," Chapters, in: Sylvester Eijffinger & Donato Masciandaro (ed.), Handbook of Central Banking, Financial Regulation and Supervision, chapter 18, Edward Elgar Publishing.
    6. Edward J. Kane, 2014. "Insurance Contracts and Derivatives that Substitute for Them: How and Where Should Their Systemic and Nonperformance Risks be Regulated?," NFI Policy Briefs 2014-PB-03, Indiana State University, Scott College of Business, Networks Financial Institute.
    7. Tim Ng, 2007. "The Reserve Bank’s policy on outsourcing by banks," Reserve Bank of New Zealand Bulletin, Reserve Bank of New Zealand, vol. 70, June.

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    More about this item

    JEL classification:

    • 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
    • P51 - Political Economy and Comparative Economic Systems - - Comparative Economic Systems - - - Comparative Analysis of Economic Systems

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