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Should Banking Supervision and Monetary Policy Tasks Be Given to Different Agencies? (1999)
| Venue: | International Finance |
| Citations: | 48 - 5 self |
BibTeX
@ARTICLE{Noia99shouldbanking,
author = {Carmine Di Noia and Giorgio Di Giorgio and Jel E G},
title = {Should Banking Supervision and Monetary Policy Tasks Be Given to Different Agencies?},
journal = {International Finance},
year = {1999},
volume = {3}
}
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Abstract
This paper adds some new arguments to the thesis that the responsibility for banking supervision should be assigned to an agency formally separated by the Central bank. We also provide some additional evidence on the macro and microeconomic performance of OECD countries whose banking systems are classi#ed according to the regulatory regime in place. We #nd that the in#ation rate is considerably higher and more volatile in countries where the Central bank acts as a monopolist in banking supervision. Besides, although banks seem to be more pro#table when Central banks supervise them, they incur into higher costs and rely more on deposits with respect to more sophisticated liabilities as a funding source. The data are not de#nitively in favor of functional separation. However, we argue that the evolution of #nancial intermediaries, moral hazard problems and especially cost accountability seem to suggest that separation would be a better solution for industrialized countries....
Keyphrases
banking supervision monetary policy task central bank functional separation pro table industrialized country funding source ation rate sophisticated liability moral hazard problem oecd country microeconomic performance cost accountability new argument additional evidence nancial intermediary central bank act regulatory regime banking system
