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Abstract

Details

Designing the New European Union
Type: Book
ISBN: 978-1-84950-863-6

Article
Publication date: 23 March 2012

David Collins, Ian Dewing and Peter Russell

The paper aims to offer an exploration of the Banking Act 1987 which was passed following the failure of Johnson Matthey Bankers (JMB) in 1984. This Act extended the role of…

2489

Abstract

Purpose

The paper aims to offer an exploration of the Banking Act 1987 which was passed following the failure of Johnson Matthey Bankers (JMB) in 1984. This Act extended the role of auditors in banking supervision by removing traditional confidentiality constraints and created a new role of “reporting accountant”. The paper seeks to examine the origin and development of these new reporting roles. In addition, the paper considers the extent to which the findings of this historical investigation might contribute to current debates on the role of auditors in banking supervision.

Design/methodology/approach

The paper draws on official documents, personal accounts of individuals responsible for dealing with the JMB crisis, and semi‐structured interviews conducted with audit partners and banking supervisors who had direct experience of implementing the supervisory reforms instituted under the Banking Act 1987. Power's explanatory schema of controversy, closure and credibility is adopted as a framework for the analysis of documentary sources and interview data.

Findings

The failure of JMB generated sufficient controversy so as to require reform of the system of banking supervision. The paper shows that JMB was a controversy since it disturbed what went before and carried with it sufficient allies for change. To achieve closure of the controversy, agreement by key actors about changes to the nature of the role of auditors was required to ensure legitimacy for the reforms. Backstage work undertaken by the auditing profession and the Bank of England provided the necessary credibility to renormalise practice around the new supervisory arrangements.

Originality/value

The paper develops Power's schema which is then employed to analyse the emergence of the new role of reporting accountant and extended role for auditors in UK banking supervision. The paper provides empirical evidence on the processes of controversy, closure and credibility that help to ensure the legitimacy of accounting and auditing change.

Details

Accounting, Auditing & Accountability Journal, vol. 25 no. 3
Type: Research Article
ISSN: 0951-3574

Keywords

Article
Publication date: 29 September 2023

Sana Belgacem, Manel Hadriche and Fethi Belhaj

The purpose of this paper is to examine the impact of supervision on banking risk to determine whether prudential measures taken especially after financial crises are effective in…

Abstract

Purpose

The purpose of this paper is to examine the impact of supervision on banking risk to determine whether prudential measures taken especially after financial crises are effective in limiting banking risks.

Design/methodology/approach

The empirical study focused on 210 annual reports of almost all Tunisian banks during the 2010–2019 period. Banking supervision effectiveness is measured by enforcement outputs (i.e. on-site audits and sanctions). The generalized least squares method of multivariate analysis was used to analyze this study.

Findings

The results show that supervision set up and on-site audits reduce bank risk, while the relationship between sanctions and risk appears to be non-significant. The results still hold after robustness tests by changing the bank's risk-taking indicators.

Practical implications

This study has important implications for managers and investors in the Tunisian context. In particular, the findings provide microevidence for the impact of supervision in Tunisian banks to reduce their risk-taking. The empirical results have important implications for the decision-making of bank managers and regulators in Tunisia as well as for relevant actors in similar emerging economies.

Originality/value

This study extends the previous literature on supervision by examining the relationship between supervision and banking risk in an emerging country, which has been little explored, Tunisia in particular. Furthermore, this study examines whether supervision reduces risk borne by Tunisian banks, and to the best of the researchers' knowledge, it is one of the pioneering studies of supervision in the Tunisian market. This latter market has different economic, political and social attributes compared to developed countries. So, this paper helps to clarify the impact of supervision enforcement and macroprudential policies. In addition, this paper strongly contributes to the various stakeholders “understanding of the importance and implication of supervision practices. However, since banks tend not to reduce their participation in risky activities to seek higher profits, supervisory policymakers and practitioners should also take a closer look at the composition of banks” investment portfolios to reduce moral hazard and regulatory arbitrage behavior. Empirically, the authors measure supervision by on-site audits and sanctions and examine how they affect bank risk level, which was never approached in Tunisia.

Details

EuroMed Journal of Business, vol. ahead-of-print no. ahead-of-print
Type: Research Article
ISSN: 1450-2194

Keywords

Article
Publication date: 31 July 2007

Donato Masciandaro, Maria J. Nieto and Henriette Prast

This paper aims to analyse the economics of financing banking supervision and attempts to respond to two questions: What are the most common financing practices? Can the…

1283

Abstract

Purpose

This paper aims to analyse the economics of financing banking supervision and attempts to respond to two questions: What are the most common financing practices? Can the differences in current financing practices be explained by country‐specific factors, using a path‐dependence approach?

Design/methodology/approach

The paper performs an empirical analysis that identifies the determinants of the financing structure of banks' prudential supervision using a sample of 90 banking supervisors (central banks and financial authorities).

Findings

The paper concludes that supervisors in central banks are more likely to be publicly funded, while financial authorities are more likely to be funded via a levy on the regulated banks. The financing rule is also explained by the structure of the financial systems. Public funding is more likely in bank‐oriented structures. Finally, the geographical factor is also significant: European bank supervisors are more oriented towards the private funding regime.

Practical implications

In general, the paper does not find evidence of the role of the political factor, the size of the economy, the level of development and the legal tradition.

Originality/value

The paper analyses the financial governance of banking supervision in a sample of 90 countries world‐wide. The empirical analysis focuses on the financing rules and identifies factors that explain the differences between supervisory authorities.

Details

Journal of Financial Regulation and Compliance, vol. 15 no. 3
Type: Research Article
ISSN: 1358-1988

Keywords

Abstract

Details

Research in Finance
Type: Book
ISBN: 978-1-78190-759-7

Article
Publication date: 19 October 2023

Aamir Aijaz Syed

The purpose of this study is to explore how the unprecedented rise in the economic policy uncertainty influence Indian banking sector stability. The unprecedented rise in the…

Abstract

Purpose

The purpose of this study is to explore how the unprecedented rise in the economic policy uncertainty influence Indian banking sector stability. The unprecedented rise in the economic policy uncertainty during the recent pandemic has garnered the attention of policymakers to investigate its consequences on different sectors of the economy.

Design/methodology/approach

In this quest, the present study uses system generalized method of moments and other econometric tools to examine the influence of economic policy uncertainty on the Indian banking sector, covering the time frame from 2000 to 2022. In addition, the current study also investigates the mediating role of regulation and supervision in the nexus of economic policy uncertainty and the Indian banking sector stability.

Findings

The empirical outcome reveals that economic policy uncertainty negatively influences banking stability. However, when economic policy uncertainty interacts with stringent banking regulations, private monitoring and supervisions, it assists in diversifying the negative impact of economic policy uncertainty on the Indian banking sector stability.

Originality/value

To the best of the author’s knowledge, the study is an original work and provides robust estimates that will assist policymakers in understanding the influence of policy uncertainty on the banking stability. Moreover, the study also helps in understanding the role of supervision and regulation in mitigating the negative consequences of policy uncertainty on the banking stability.

Details

Journal of Financial Regulation and Compliance, vol. 32 no. 1
Type: Research Article
ISSN: 1358-1988

Keywords

Article
Publication date: 1 January 2001

Kern Alexander

The need for international regulation of financial markets became apparent in the mid‐1970s in response to the post‐Bretton Woods liberalisation of financial markets. The…

Abstract

The need for international regulation of financial markets became apparent in the mid‐1970s in response to the post‐Bretton Woods liberalisation of financial markets. The elimination of the fixed exchange rate parity with gold resulted in the privatisation of financial risk, which created pressure to eliminate controls on cross‐border capital movements and the further deregulation of financial markets. It became necessary for national regulatory authorities to promote safe and sound banking systems through the effective management of systemic risk in national markets. Similarly, the need for international standards of prudential supervision was also recognised, to prevent solvent banking institutions in one jurisdiction from losing business to less respectable institutions operating in other jurisdictions whose laws permitted cut‐rate financial services and other risky financial practices. The privatisation of financial risk also created the need for financial institutions to spread their risks over many assets and activities, which led, in turn, to a significant increase in short‐term cross‐border portfolio investment that has, in many instances, exposed capital‐importing countries to increased systemic risk due to the volatility of such investments.

Details

Journal of Financial Crime, vol. 8 no. 3
Type: Research Article
ISSN: 1359-0790

Article
Publication date: 1 March 2001

Kern Alexander

This paper examines the need for international regulation of financial markets and suggests the possible role that a global financial supervisor might play in providing effective…

Abstract

This paper examines the need for international regulation of financial markets and suggests the possible role that a global financial supervisor might play in providing effective regulation of international financial markets. The first part discusses the nature of systemic risk in the international financial system and the necessity for international Minimum Standards of prudential supervision for banking institutions. The second part examines the efforts of the Basel Committee on Banking Supervision to devise non‐binding international standards for managing systemic risk in financial markets. Recent financial crises in Asia, Russia and Latin America suggest, however, that informal efforts by international bodies such as the Basel Committee are inadequate to address the risk of systemic failure in financial systems. The third part therefore argues that efficient international financial regulation requires certain regulatory functions to be performed by a global supervisor acting in conjunction with national regulatory authorities. These functions should involve the authorisation of financial institutions, generation of rules and standards of regulatory practice, surveillance of financial markets, and coordination with national authorities in implementing and enforcing such standards.

Details

Journal of Money Laundering Control, vol. 5 no. 1
Type: Research Article
ISSN: 1368-5201

Article
Publication date: 1 February 1992

MAXIMILIAN J.B. HALL

This paper is published in two parts. The first, which is published here, starts by considering the background to UK banking supervision and examining the effectiveness of the Bank

Abstract

This paper is published in two parts. The first, which is published here, starts by considering the background to UK banking supervision and examining the effectiveness of the Bank of England and BCCI's auditors in the supervision of BCCI. The author then assesses the suitability of the Banking Act 19.87 following which is a list of recommended reform measures. The first part of the paper concludes with a consideration of banking supervision in Luxembourg. Part two of the paper examines deficiencies in the international supervision of banking and will be published in the next issue of The International Journal of Regulatory Law and Practice, Volume 1 Number 3.

Details

Journal of Financial Regulation and Compliance, vol. 1 no. 2
Type: Research Article
ISSN: 1358-1988

Article
Publication date: 1 June 2004

Donato Masciandaro

The objective of this work is to analyse worldwide trends in financial supervision architectures. The focus is on the key issue in the debate – the single supervisor versus…

1377

Abstract

The objective of this work is to analyse worldwide trends in financial supervision architectures. The focus is on the key issue in the debate – the single supervisor versus multiauthority model – in order to build up indexes of supervision unification, essential to perform studies on the causes and effects of various supervisory regimes. First, the paper introduces a Financial Authorities’ Concentration (FAC) Index. A comparative analysis of 69 countries confirmed that an increase in the degree of concentration of supervisory powers is evident in the developed countries, and particularly in the European Union. Secondly, the paper considers the nature of the institutions to which control responsibilities are entrusted. In particular, the role the central bank plays in the various national institutional settings is examined. An index of the central bank’s involvement in financial supervision is introduced, the Central Bank as Financial Authority (CBFA) Index. Each national institutional structure can be identified with the two above characteristics. Two models are the most frequent: (a) countries with a high level of unification of powers and weak central bank involvement (single financial authority regimes); and, (b) countries with a low level of unification of powers and strong central bank involvement (central bank dominated multiple supervisor regimes). A trade‐off therefore emerges between the degree of financial sector unification and the role of the central bank. Two possible explanations of this relationship emerged: the blurring hazard effect and the monopolistic bureau effect.

Details

Journal of Financial Regulation and Compliance, vol. 12 no. 2
Type: Research Article
ISSN: 1358-1988

Keywords

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