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Prudential Regulation and Competition in Financial Markets

Author

Listed:
  • Rudiger Ahrend

    (OECD)

  • Jens Matthias Arnold

    (OECD)

  • Fabrice Murtin

    (OECD)

Abstract

This paper examines how a range of stability-oriented regulatory policies for banking and insurance are related to selected stability and competition outcomes in these sectors. Based on survey information on financial market regulation, policy indicators for eight areas of prudential banking regulation are constructed, in addition to indicators for the insurance sector. Despite incomplete information on some areas that turned out to be important in the context of the recent financial crisis, the indicators correlate well with different measures of financial stability, both during the recent crisis and beyond. Furthermore, the results do not support the view that there is a general trade-off between stability-oriented regulatory policies and competition in banking and insurance. Régulation prudentielle et concurrence sur les marchés financiers Cette étude examine le lien entre les politiques de régulation prudentielle des industries de la banque et de l’assurance et les résultats observés dans ces secteurs en termes de stabilité et de concurrence. Sur la base d’enquêtes portant sur la régulation des marchés financiers, des indicateurs sont construits pour évaluer les politiques touchant à huit segments différents de la régulation bancaire prudentielle, ainsi qu‘au secteur de l’assurance. En dépit de lacunes dans le renseignement de certains segments de la régulation, lacunes préjudiciables dans le contexte récent de crise financière, ces indicateurs présentent une corrélation satisfaisante avec diverses mesures de stabilité financière, à la fois dans ce contexte de crise et au-delà. En outre, les résultats ne confirment pas l’hypothèse qu’il y aurait en général un arbitrage entre la régulation prudentielle et la concurrence dans les secteurs de la banque et de l’assurance.

Suggested Citation

  • Rudiger Ahrend & Jens Matthias Arnold & Fabrice Murtin, 2009. "Prudential Regulation and Competition in Financial Markets," OECD Economics Department Working Papers 735, OECD Publishing.
    • Handle: RePEc:oec:ecoaaa:735-en
    DOI: 10.1787/220117664431
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    Citations

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    Cited by:

    1. Douglas Sutherland & Peter Hoeller & Balázs Égert & Oliver Röhn, 2010. "Counter-cyclical Economic Policy," OECD Economics Department Working Papers 760, OECD Publishing.
    2. Tony McDonald & Steven Morling, 2011. "The Australian economy and the global downturn, Part 1: Reasons for resilience," Economic Roundup, The Treasury, Australian Government, issue 2, pages 1-31, September.
    3. Rudiger Ahrend & Jens Arnold & Fabrice Murtin, 2011. "Have more strictly regulated banking systems fared better during the recent financial crisis?," Applied Economics Letters, Taylor & Francis Journals, vol. 18(5), pages 399-403.
    4. Rudiger Ahrend & Cyrille Schwellnus, 2013. "Do investors disproportionately shed assets of distant countries during global financial crises?: The role of increased uncertainty," OECD Journal: Economic Studies, OECD Publishing, vol. 2012(1), pages 1-20.
    5. Rudiger Ahrend & Antoine Goujard & Cyrille Schwellnus, 2012. "International Capital Mobility: Which Structural Policies Reduce Financial Fragility?," OECD Economic Policy Papers 2, OECD Publishing.
    6. Nicholas Crafts & Peter Fearon, 2010. "Lessons from the 1930s Great Depression," Oxford Review of Economic Policy, Oxford University Press and Oxford Review of Economic Policy Limited, vol. 26(3), pages 285-317, Autumn.
    7. Ahrend, Rudiger, 2010. "Monetary ease: A factor behind financial crises? Some evidence from OECD countries," Economics - The Open-Access, Open-Assessment E-Journal (2007-2020), Kiel Institute for the World Economy (IfW Kiel), vol. 4, pages 1-30.

    More about this item

    Keywords

    assurance; banking; banque; competition; concurrence; insurance; prudential regulation; régulation prudentielle; stability; stabilité;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G01 - Financial Economics - - General - - - Financial Crises
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • L11 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Production, Pricing, and Market Structure; Size Distribution of Firms

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