Table of Contents

Research Handbook on International Banking and Governance

Research Handbook on International Banking and Governance

Elgar original reference

Edited by James R. Barth, Chen Lin and Clas Wihlborg

The contributors – top international scholars from finance, law and business – explore the role of governance, both internal and external, in explaining risk-taking and other aspects of the behavior of financial institutions. Additionally, they discuss market and policy features affecting objectives and quality of governance. The chapters provide in-depth analysis of factors such as: ownership, efficiency and stability; market discipline; compensation and performance; social responsibility; and governance in non-bank financial institutions. Only through this kind of rigorous examination can one hope to implement the financial reforms necessary and sufficient to reduce the likelihood and severity of future crises.

Chapter 34: Banking Regulatory Governance in China: A Legal Perspective

Yufeng Gong and Zhongfei Zhou

Subjects: economics and finance, money and banking

Extract

Yufeng Gong and Zhongfei Zhou 34.1 INTRODUCTION The past decades have witnessed that bank failure is more or less regulatory failure. In financial crises in East Asia, Ecuador, Mexico, Russia, Turkey and Venezuela, weak regulatory governance – for example political interference in the regulatory process, regulatory forbearance, weak regulation, and lack of public sector accountability and transparency – is considered a contributing factor to the depth and size of the systemic crises.1 Since these crises, the importance of good banking and financial regulatory governance to financial stability had begun to attract attention from international standard-setting bodies such as the Basel Committee on Banking Supervision (hereinafter Basel Committee), the International Association of Insurance Supervisors, and the International Organization of Securities Commissions as well as the International Monetary Fund (IMF) and the World Bank. Notwithstanding its prominence, the definition of and guidance on regulatory governance of a banking regulatory agency are not so clear in contrast to corporate governance. Udaibir Das and Marc Quintyn define regulatory governance as the capacity to meet the delegated objectives, protection from industry capture and political interference, and the respect of the agency for the broad goals and policies of the legislature.2 They identify independence, accountability, transparency and integrity as the four key institutional underpinnings for good regulatory governance.3 As the basic contents of integrity are included in the other three components, this chapter will employ independence, accountability and transparency to analyze regulatory governance of China’s banking regulatory agency, the China Banking Regulatory Commission (hereinafter CBRC) from a legal...

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