Endnotes

¹As traditionally defined, regulation refers to the set of rules and standards that govern the operation of financial institutions, while supervision refers to the oversight/monitoring of the application of those rules and standards. For the purposes of this paper, the two terminologies are used interchangeably.

²Milo (2002).

³Commercial banks refer to both commercial banks and universal banks, unless otherwise specified.

⁴See Levine (2003) and Demetriades and Andrianova (2003) for recent overviews of the literature.

⁵The Joint Forum was established in 1996 under the aegis of the Basel Committee on Banking Supervision, the International Organisation of Securities Commissions (IOSCO), and the International Association of Insurance Supervisors (IAIS), in order to take forward the work of the Tripartite Group on a range of issues relating to the supervision of financial conglomerates.

⁶Milo (2002) discusses the evolution of financial sector supervision in the Philippines more fully, including its fragmented nature and the resulting difficulties.

⁷Carmichael (2006; in Corbett, 2007) differentiates integrated agencies from unified ones. Integrated agencies supervise all types of financial institution and activity in one agency, although they may be limited in terms of the aspects of business that they cover. On the other hand, a unified agency is one that covers prudential regulation and “conduct-of-business” supervision.

⁸Èihák and Podpiera (2006) define a fully integrated supervisory agency as an agency that is in charge of (micro) prudential supervision of at least the three main segments of most financial sectors i.e., banking, insurance, and securities markets). Such agency may or may not be in charge of consumer protection. They do not consider agencies, which are in charge of prudential supervision of two of the three main financial sectors, as integrated supervisors.

⁹See inter alia Knack and Keefer (1995, 1997); Barro (1997); Hall and Jones (1999); Kaufmann et al. 1999); Acemoglu et al. (2001, 2002); Easterly and Levine (2001, 2003); Rodrik et al. (2004); Beck and Laeven (2005); and Hasan et al. (2006). For extensive reviews of the literature, see Aron (2000); Jütting (2003); and Shirley (2005).

¹⁰For a fuller discussion, see Banloi (2004), Hutchcroft (1997, 1998), and Magno (1992).

¹¹See Appendix 1 for a list of the different components of the EFW index and a brief description of the chain-linked summary index.

¹²Appendix 2 lists the relevant variables for the 10 broad indicators of economic freedom.

¹³See Appendix 3 for the interpretation of scores for selected factors of the index of economic freedom.

¹⁴It includes the Heritage Foundation/Wall Street Journal Index of Economic Freedom. Kaufmann, Kraay, and Mastruzzi (2004) contains a complete description of the statistical methodology underlying the indicators.

¹⁵See Levine (2003) and Demetriades and Andrianova (2003) for recent reviews of the literature.

¹⁶E.g., Demirguec-Kunt and Detragiache (1998), Kaufmann et al. (1999), Hellmann et al. (2000), Andrianova et al. (2002).

¹⁷La Porta et al. (1997, 1998); see Beck et al. (2001a, 2001b) for a review of the literature.

¹⁸E.g., Rajan and Zingales (2003), Acemoglu, Johnson, and Robinson (2005), Lamoreaux and Rosenthal (2005).

¹⁹I.e., government controls on interest rates, credit controls and restrictions on deposits in foreign currencies in the banking sector; limits on foreign ownership and profit repatriation in the stock market; and limits on international capital flows.

²⁰Masciandaro’s political delegation approach in dealing with financial supervisory architecture issues is, to the author’s best knowledge, the first to explicitly examine the relationship between political factors and financial supervisory architectures.

²¹Almost the same as the countries listed in Table 10, p. 13.

²²Masciandaro notes that in the sample of countries with a single supervisor, only the UK seems to be the exception in the inverse relationship between the degree of financial supervision consolidation and the financial market dimension. He ran the same regressions without the UK, and found that all the results are confirmed, with a slight improvement.

²³Recall that each component and sub-component of the EFW index is placed on a scale from 0 to 10 a higher index value represents a better quality of institutions); while the World Bank’s governance indicators are measured in units ranging from about -2.5 to 2.5, with higher values corresponding to better governance outcome.

²⁴The issue of corporate structure of bank ownership will be addressed in a separate paper.

Download this Discussion Paper [ PDF 711.9KB| 68 pages ].

Comment(s)

There are [0] comment(s) for this entry. Post a comment.