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External authorities in Banking Supervision: how does inflation targeting affect the decision?

This work aims to demonstrate that the choice of a policy maker to assign banking supervisory tasks to the Central Bank is related to its degree of independence. If a Central bank is highly independent in conducting monetary policy, it is likely that the policy maker will not assign it supervisory tasks. The risk can be mitigated by the enforcement of strong anti-inflationary regimes.
The results, on a sample of 27 countries, are not very relevant for what concerns relations between
mandate commitment, although it seems there are more poor performing central banks than
good performing ones among those with supervisory tasks. Supervisory powers and the degree of independence seem to have a positive relation.
In conclusion, it seems that the decision to assign supervisory tasks occurs more frequently when the central bank is highly independent in its supervisory activity and this independence is mitigated by a strong mandate on inflation control.

Mostra/Nascondi contenuto.
External authorities in Banking Supervision: how does inflation targeting affect the decision? 1. Introduction Since the recent crisis has made clear the need for regulation restructuring, on the news it seemed to have become only a matter of when. Yet the reforms have not been produced as quickly as it was thought. The reasons that hamper such reforms are for sure due to political interest, but they also affect a technical area. The debate on which supervisory architectural model is best, indeed, is still going on and far to be solved. Empirical analysis does not seem to provide any strong suggestion whether one model should be better than another one. A great part of the debate is concerned on how much involvement should be assigned to Central Banks, and since the theoretical work does not come to a clear conclusion, one can focus on the concrete decisions of policy makers, in the attempt to extract a rationale from the supervisory structures in the real world. This work considers the agency problem as a driver in the decision, where the objective is to minimize diseconomies coming from informational asymmetries and the subsequent room for collusion. There is not much literature on this topic, but we can apply to the banking sector the hierarchical agency framework introduced by Kofman and Lawarrée (1993), which was designed for a corporate environment, but offers some ideas for what concerns the role of internal and external supervisors. Kofman and Lawarrée introduced a third player in the standard 2

Laurea liv.I

Facoltà: Economia

Autore: Alice Volpe Contatta »

Composta da 36 pagine.

 

Questa tesi ha raggiunto 153 click dal 22/09/2009.

Disponibile in PDF, la consultazione è esclusivamente in formato digitale.