Regulatory and Supervisory Independence and Financial Stability

By M. Quintyn, Michael W. Taylor. Social Science Research Network, 2002

254 citations recorded by the source corpus.

Despite its importance, the issue of financial sector regulatory and supervisory independence (RSI) has received only marginal attention in literature and practice. However, experience has demonstrated that improper supervisory arrangements have contributed significantly to the deepening of several recent systemic banking crises. In this paper we argue that RSI is important for financial stability for the same reasons that central bank independence (CBI) is important for monetary stability. The paper lays out four key dimensions of RSI-regulatory, supervisory, institutional budgetary - and discusses ways to achieve them. We also discuss institutional arrangements needed to make independence work in practice. The key issue in this respect is that agency independence and accountability need to go hand in hand. The paper discusses a number of accountability arrangements. (JEL G18, G28, K23, L50).

Subfields: Finance, Strategy and Management

View Paper: https://www.semanticscholar.org/paper/d681fc58e3a8c289ff010787a63bdd92d787f534

How researchers see this paper

The researchers whose trusted networks rank it highest, strongest advocate first. Every researcher gets a different order.

In Finance

1. Yun Luo
2. Glauco De Vita
3. Sailesh Tanna
4. Tomáš Havránek
5. Marek Rusňák

In Strategy and Management

1. Sailesh Tanna
2. Yun Luo
3. Glauco De Vita

Citations in the corpus

• Central Bank Autonomy: Lessons from Global Trends (2007, background): “28 See Arnone and Gambini (2007) for a review of the literature, and Quintyn and Taylor (2002) for an earlier discussion on the location of supervisory functions.”
• Does Regulatory Governance Matter for Financial System Stability? An Empirical Analysis (2004, unknown): “The unique nature of financial supervisors—in particular, banking supervisors, but increasingly also supervisors of other subsectors of the financial system—has been widely recognized (see Quintyn and Taylor (2003) and references therein).”
• Financial openness, risk and bank efficiency: Cross-country evidence (2016, background): “On the other hand, Quintyn and Taylor (2003) warn that improper regulatory and supervisory policies can lead to financial instability and strong supervisory power might relate to corruption as supervisors use their power to benefit preferred organizations.”