Table of Contents

Research Handbook on International Financial Regulation

Research Handbook on International Financial Regulation

Elgar original reference

Edited by Kern Alexander and Rahul Dhumale

The globalisation of financial markets has attracted much academic and policymaking commentary in recent years, especially with the growing number of banking and financial crises and the current credit crisis that has threatened the stability of the global financial system. This major Research Handbook sets out to address some of the fundamental issues in financial regulation from a comparative and international perspective and to identify some of the main research themes and approaches that combine economic, legal and institutional analysis of financial markets.

Chapter 14: Determinants of Financial Supervision Regimes: Markets, Institutions, Politics, Law or Geography?

Donato Masciandaro

Subjects: economics and finance, financial economics and regulation, law - academic, finance and banking law

Extract

Donato Masciandaro Editors’ abstract: Professor Donato Masciandaro assesses the determinants of the recent wave of financial supervision reforms, reviewing six different views concerning the determinants of financial supervision architectures: economic view, market view, political view, institutional view, legal view and geography view. The empirical tests support for the following view: in a setting characterized by a central bank traditionally less involved in supervision a unified model of supervision seems to be more likely to occur. Furthermore, the probability that a country will move toward a unified model is higher the smaller the overall size of the economy and when the legal framework is characterised by German and Scandinavian roots. Therefore the economic size view and the legal view matter. INTRODUCTION Over the past decade, many countries have seen changes in the architecture of financial supervision (Figure 14.1). Financial supervision regimes vary significantly from country to country. A review of the supervision architectures1 indicates a trend toward a gradual concentration of powers. In Europe this trend has appeared to be rather strong in recent years. In addition to Norway, the first country to establish a single supervisor in 1986, and Iceland (1988), six other European Union Member States – Austria (2002), Belgium (2004), Denmark (1988), Germany (2002), Sweden (1991) and the United Kingdom (1997) – have assigned the task of supervising the entire financial system to a single authority other than the central bank. In Ireland (2003), the supervisory responsibilities 9 8 7 6 5 4 3 2 1 0 1986 1987 1988...

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