Search results

1 – 10 of over 39000
To view the access options for this content please click here
Article
Publication date: 1 January 2006

Edgardo Demaestri and Federico Guerrero

Aims to review the potential risks associated with the separation of banking regulation from the orbit of the central bank in Latin‐American and Caribbean countries (LAC).

Downloads
591

Abstract

Purpose

Aims to review the potential risks associated with the separation of banking regulation from the orbit of the central bank in Latin‐American and Caribbean countries (LAC).

Design/methodology/approach

Sets out information on the banking regulators in LAC and on the current degree of involvement of the central bank in banking regulation; the main monetary policy issues connected to the separation of banking regulation from the central bank; and the main banking regulation issues involved.

Findings

The separation of banking regulation from the central bank would not present any great danger to LAC currently. However, the need to conduct the move in accordance with best principles must be emphasized.

Originality/value

Given the fertile ground offered by the countries of LAC, this paper presents arguably the most comprehensive examination to date of this “hot potato”.

Details

Journal of Financial Regulation and Compliance, vol. 14 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Article
Publication date: 15 October 2021

David Mathuva and Moses Nyangu

In this paper, the authors examine the association between the banking regulatory regime and the quality of bank earnings. We further investigate whether the banking

Abstract

Purpose

In this paper, the authors examine the association between the banking regulatory regime and the quality of bank earnings. We further investigate whether the banking agency regulatory characteristics moderate the association between banking regulation and earnings quality.

Design/methodology/approach

Using panel data spanning 29 years over the period 1991 to 2019, the authors model bank earnings quality as a function of scores for banking regulation for 170 banks in the East African region using both the feasible generalized least squares (FGLS) and generalized method of moments (GMM) estimation methods.

Findings

The results, which are robust for endogeneity among other checks, reveal a positive impact of bank regulatory mechanisms on the quality of bank earnings. The authors further establish differential impact of specific regulatory mechanisms, with some contributing positively toward earnings management while others contributing negatively toward earnings management. The differential impacts of banking regulation on earnings quality are also manifested in the country-level analyses.

Research limitations/implications

First, the study utilises a mix of bank-specific, country-specific as well as economy-specific variables in one dataset. Second, the authors utilise survey-based data using the World Bank's Bank Regulation and Supervision Surveys (BRSS) for the periods 1999 to 2019. The authors assume that the bank regulatory mechanisms in place pre-1999 are close to the mechanisms in place as per the 1999 BRSS. Given limitations in data availability, the authors are not able to control for banks engaging in multiple activities such as insurance, underwriting of securities, FinTechs, among others.

Practical implications

The results are useful in bridging the gap between theory and practice regarding the expected effect of strict banking regulations on the quality of earnings in Eastern African Banks. For the positive impact of banking regulation on bank earnings quality to be felt, the institutional, social and environmental specificities of the five selected countries need to be adequately developed and taken into consideration.

Originality/value

This study is perhaps the first to utilise a large dataset of commercial banks from countries in a developing region characterised by relatively lower enforcement and dynamism in the banking regulation. Further, in-depth studies on the association between banking regulation and earnings quality remain sparse.

Details

Journal of Accounting in Emerging Economies, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 2042-1168

Keywords

To view the access options for this content please click here
Book part
Publication date: 1 January 2005

James A. Wilcox

Deregulation and other factors permit and encourage financial institutions to become more integrated, both within their own (financial) industries, such as banking and…

Abstract

Deregulation and other factors permit and encourage financial institutions to become more integrated, both within their own (financial) industries, such as banking and insurance, and across these industries. Financial regulators have responded with like integration. As financial institutions increasingly compete with firms from other industries and areas, financial regulators similarly compete more across borders. The resulting competition in financial regulation enhances innovation, choice, and efficiency. The advent of home-run regulation, which in general allows financial institutions to adhere only to the financial regulations of their home area and is spreading across the US and Europe, may allow numerous regulatory regimes within a given market.

Details

Research in Finance
Type: Book
ISBN: 978-0-76231-277-1

To view the access options for this content please click here
Article
Publication date: 8 February 2016

Jaffar Mohammed Ahmed

The purpose of this paper is to describe a theoretical model for banking regulation in relation to Basel accords implementation. As a risk manager practitioner at a…

Downloads
1301

Abstract

Purpose

The purpose of this paper is to describe a theoretical model for banking regulation in relation to Basel accords implementation. As a risk manager practitioner at a financial institution and in-charge of Basel implementation in a Basel accords environment of banking regulation, the author has been intrigued by the theoretical basis of the design of Basel accords. The objective was to investigate a theoretical model in the literature according to which the accords were designed. In case of deficiency in the literature of this model, the author seeks to provide a juxtaposition to the theoretical model that explains the accords adoption and implementation by regulators.

Design/methodology/approach

This paper presents a review of existing literature.

Findings

After reviewing of public interest theory, cultural theory, administration theory and the new-institutionalism theory, the author found little application of these theories to the capital-based regulation, particularly in relation to Basel 2 accord. There is deficiency in the literature of a conceptual theoretical framework based on which the author can explain the adoption of Basel accords. The author has provided a theoretical model that links these theories to the practice of banking regulation. This paper found deficiencies in theories of how banks should be regulated as compared to several theories that explains why banks are regulated.

Originality/value

After reviewing of public interest theory, cultural theory, administration theory and the new-institutionalism theory, the author found little application of these theories to the capital-based regulation, particularly in relation to Basel 2 accord. There is deficiency in the literature of a conceptual theoretical framework based on which the author can explain the adoption of Basel accords. The author has provided a theoretical model that links these theories to the practice of banking regulation. This paper found deficiencies in theories of how banks should be regulated as compared to several theories that explains why banks are regulated.

Details

Journal of Financial Regulation and Compliance, vol. 24 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Article
Publication date: 19 September 2019

Ali Jamali

The FDIC Improvement Act of 1991 sets out five categories of capital and mandates corrective action for banks. Each bank based on its capital amount fall in the certain…

Abstract

Purpose

The FDIC Improvement Act of 1991 sets out five categories of capital and mandates corrective action for banks. Each bank based on its capital amount fall in the certain categories or states. The purpose of this paper is to consider the effect of banking regulations and supervisory practices on capital state transition.

Design/methodology/approach

First, the authors investigate how much the practices influence banks' capital adequacy using a dynamic panel data method, the generalized method of moments. Then, to scrutinize the results of the first phase, the authors estimate the effect of practices on some characteristics of capital state transition such as transition intensity, transition probability and state sojourn time using multi-state models for panel data in 107 developing countries over the period 2000 to 2012.

Findings

The dynamic regression results show that capital guidelines, supervisory power and supervisory structure can have significantly positive effects on the capital adequacy state. Moreover, the multi-state Markov panel data model estimation results show that the significantly positive-effect practices can change the capital state transition intensity considerably; for example, they can transmit the critical-under-capitalized (the lowest) capital state of banks directly to a well or the adequate-capitalized (the highest) capital state without passing through middle states (under-capitalized and significantly-undercapitalized). Moreover, the results present some new evidence on transition probability and state sojourn time.

Originality/value

The main contribution of this paper, unlike the existing literature, is to consider the power of banking regulations and supervisory practices to improve the capital state using a multi-state Markov panel data model.

Details

Journal of Financial Regulation and Compliance, vol. 28 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Article
Publication date: 9 October 2019

Nur Dyah Nastiti and Rahmatina Awaliah Kasri

The 2015 global economic crisis has triggered the issuance of several banking regulations in Indonesia, including those related to temporary stimulus for Islamic banks and…

Downloads
1379

Abstract

Purpose

The 2015 global economic crisis has triggered the issuance of several banking regulations in Indonesia, including those related to temporary stimulus for Islamic banks and branchless banking (fintech). However, few studies attempt to evaluate the effectiveness of such regulations. Thus, this study aims to determine the role and assess the effectiveness of such banking regulations.

Design/methodology/approach

The data used cover all 12 Islamic commercial banks in Indonesia during the stimulus period of Q3.2015 to Q2.2017. The variables included were banks’ fundamental factors (Islamic financing, capital adequacy ratio, investment, non-performing financing, return on asset, efficiency, financing deposit ratio and fintech) and macroeconomic variables (inflation, exchange rate and money supply). The model was analyzed by using multiple linear regressions with generalized least square estimation technique.

Findings

The main finding suggests that the stimulus regulation indeed played a positive role in the acceleration of Islamic bank financing. However, the fintech-related regulation was not yet effective to achieve the goal, at least in the short term. Furthermore, the study found that return of assets, operational efficiency, financing deposit ratio and money supply also influenced Islamic financing.

Practical implications

For policymakers, the effectiveness of the temporary stimulus in accelerating Islamic banking financing and preventing the possible negative impacts of the external crisis provides indications that the regulator could conduct similar policy in the future. More generally, the findings are also expected to enrich Islamic banking literature.

Originality/value

This is possibly one of the few studies to investigate the role and effectiveness of banking regulations on Islamic banking financing in Indonesia.

Details

International Journal of Islamic and Middle Eastern Finance and Management, vol. 12 no. 5
Type: Research Article
ISSN: 1753-8394

Keywords

To view the access options for this content please click here
Article
Publication date: 3 January 2019

Mohamed A. Ayadi, Nesrine Ayadi and Samir Trabelsi

This paper aims to analyze the effects of internal and external governance mechanisms on the performance and risk taking of banks from the Euro zone before and after the…

Downloads
1431

Abstract

Purpose

This paper aims to analyze the effects of internal and external governance mechanisms on the performance and risk taking of banks from the Euro zone before and after the 2008 financial crisis.

Design/methodology/approach

To avoid macroeconomic problems and shocks and because of data availability, the authors select some countries of the Euro zone, namely, France, Belgium, Germany and Finland, during the 2004-2009 period. These countries share similar macroeconomic environments (unemployment, inflation and economic growth rates). All the data relating to the banks are manually drawn from the supervising reports submitted to banks and are available on the banks’ websites and/or on that of the AMF website. The banks included in our sample are drawn from the list of European central banks on www.ecb.int

Findings

The empirical results show that banks undertake tradeoffs between different governance mechanisms to alleviate the intensity of the agency conflicts between the shareholders and managers. The findings also confirm that internal mechanisms and capital regulations are complementary and significantly impact bank performance.

Research limitations/implications

This analysis can be extended through studying the interaction between bondholders’ governance and shareholders’ governance and their impact on the 2008 financial crisis.

Practical implications

The changes in banking governance help banks find a useful and necessary way to avoid ill-considered risks that can cause a systemic risk. Therefore, some conditions should be met so that banking governance can contribute to the economic development.

Social implications

Culture and mentality of good banking governance must grow as much as possible through awareness-raising, training, promotion, recognition of performance, enhancing procedure transparency and stability of good banking governance and regulations, strengthening the national capacity to fight against corruption, and preventive mechanisms.

Originality/value

This paper complements previous studies, mainly those of Andres and Vallelado (2008) who examine the impact of the components of the board on banking performance and of Laeven and Levine (2009) who estimate the combined effect of regulatory and ownership structure on the risk-taking of each bank.

Details

Managerial Auditing Journal, vol. 34 no. 3
Type: Research Article
ISSN: 0268-6902

Keywords

To view the access options for this content please click here
Article
Publication date: 28 June 2013

Nafis Alam

This paper aims to examine whether bank regulation, supervision and monitoring enhance or impede technical efficiency and risk‐taking behaviour of Islamic banks across the globe.

Downloads
5483

Abstract

Purpose

This paper aims to examine whether bank regulation, supervision and monitoring enhance or impede technical efficiency and risk‐taking behaviour of Islamic banks across the globe.

Design/methodology/approach

Technical efficiency scores are calculated using the data envelopment analysis (DEA) model while simultaneity between banks' supervision and regulation on risk and efficiency estimates are calculated using the seemingly unrelated regression (SUR) approach.

Findings

The author's results suggest that regulations and strict monitoring of banking operation, and higher supervisory power of the authorities, increase the technical efficiency for Islamic banks. The opposite effect is observed in the case of risk‐taking behaviour of Islamic banks, with higher restrictions resulting in a reduction in risk taking of Islamic banks.

Research limitations/implications

The Basel II & Basel III guidelines suggested that stricter regulations and supervision could hamper banking efficiency. The existence of a powerful supervisory body could also lead to the inefficiency of banks. The DEA scores from this paper suggest that this may not necessarily be the case, especially as Islamic banks appear to be technically efficient in stricter regulatory conditions.

Originality/value

A message that emerges from this analysis is that there is a strong link between Islamic bank technical efficiency and risk‐taking behaviour with the Central Bank regulatory and supervisory policies. It is also conclusive that the Islamic banking system works well within a stricter regulatory environment.

Details

Journal of Financial Reporting and Accounting, vol. 11 no. 1
Type: Research Article
ISSN: 1985-2517

Keywords

To view the access options for this content please click here
Article
Publication date: 9 November 2012

Wei Ping He

The purpose of this paper is to provide an overview of China's contemporary banking regulatory system, with particular focus on regulatory control of foreign banks trading…

Downloads
2726

Abstract

Purpose

The purpose of this paper is to provide an overview of China's contemporary banking regulatory system, with particular focus on regulatory control of foreign banks trading in China. The paper addresses three aspects of Chinese banking regulation: what does China regulate; why does China regulate; and how does China regulate. Much of the discussion is concerned with China's regulatory agencies particularly with the role of the CBRC as the principal regulator in China's banking sector.

Design/methodology/approach

In the first instance the paper presents an overview of banking regulatory models gained from a review of theoretical literature in the area. Then through a wide ranging review of Chinese publications, both academic and official, the paper seeks to relate the course of regulatory reform in China, both in terms of compliance with orthodox regulatory theory, and the unique regulatory requirements of the Chinese banking system.

Findings

The paper recognises that China has embraced the need for banking regulation with the establishment of an institutional structure that is responsive to both banking supervision and government policy. Within that structure the role of the CBRC, the pervasive manner in which that agency operates, and the content of its regulatory output have been identified and critically reviewed.

Originality/value

In its review of the modernization of China's banking regulatory system, the paper achieves originality from the author's research into, and critical reflections on Chinese generated literature, both institutional and academic, which is then communicated in a manner that will be understood by readers familiar with Western banking regulatory theory.

Details

Journal of Financial Regulation and Compliance, vol. 20 no. 4
Type: Research Article
ISSN: 1358-1988

Keywords

To view the access options for this content please click here
Article
Publication date: 1 August 2003

Mazhar M. Islam

In recent years, the central monetary authorities of some Gulf Cooperation Council countries have made several regulatory changes in order to achieve social & economic…

Downloads
2254

Abstract

In recent years, the central monetary authorities of some Gulf Cooperation Council countries have made several regulatory changes in order to achieve social & economic goals. The monetary authorities of these countries have strengthened prudential norms. Asset classifications and provisioning norms have moved closer to international standards. Banks are required to maintain capital to risk weighted assets ratios of 8 per cent required by the BIS. Local banks follow International Accounting Standards. Although the central monetary authorities of the GCC countries are active in supervising and monitoring their regulations on financial institutions, but not in a rapid way. In a global financial market, Islamic‐banking regulators that operate Islamic banks should think about the compatibility of the regulatory setting. Through a deep understanding of the nature of the Islamic banking business and the recent western banking supervisory framework, Islamic banking regulators will be able to develop a sound banking system without loosing its own distinction.

Details

Managerial Finance, vol. 29 no. 7
Type: Research Article
ISSN: 0307-4358

Keywords

1 – 10 of over 39000