Prudential Supervision
What Works and What Doesn’t
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Prudential Supervision
What Works and What Doesn’t
Since banking systems play a crucial role in maintaining the overall health of the economy, the adverse effects of poorly supervised systems may be quite severe. Without some form of vigilant external oversight, banking systems could fall prey to excessive risk taking, moral hazard, and corruption. Prudential supervision provides that oversight, using government regulation and monitoring to ensure the soundness of the banking system and, by extension, the economy at large.
The contributors to this thoughtful volume examine the current state of prudential supervision, focusing on fundamental issues and key pragmatic concerns. Why is prudential supervision so important? What kinds of excess must it guard against? What particular forms does it take? Which of these are the most effective deterrents against mismanagement and system overload in today’s rapidly shifting financial climate? The contributors foresee a continued movement beyond simple regulatory rules in banking and toward a more active evaluation and supervision of a bank’s risk management practices.
The contributors to this thoughtful volume examine the current state of prudential supervision, focusing on fundamental issues and key pragmatic concerns. Why is prudential supervision so important? What kinds of excess must it guard against? What particular forms does it take? Which of these are the most effective deterrents against mismanagement and system overload in today’s rapidly shifting financial climate? The contributors foresee a continued movement beyond simple regulatory rules in banking and toward a more active evaluation and supervision of a bank’s risk management practices.
295 pages | 8 line drawings, 83 tables | 6 x 9 | © 2001
National Bureau of Economic Research Conference Report
Economics and Business: Economics--General Theory and Principles, Economics--Money and Banking
Table of Contents
Acknowledgments
Introduction—Frederic S. Mishkin
1. Banking Systems around the Globe: Do Regulation and Ownership Affect Performance and Stability? James R. Barth, Gerard Caprio Jr., and Ross Levine
2. Supervising Large Complex Banking Organizations: Adapting to Change, Lawrence H. Meyer
3. Market Discipline in the Governance of U.S. Bank Holding Companies: Monitoring versus Influencing, Robert R. Bliss and Mark J. Flannery
Comment: Raghuram G. Rajan
Discussion Summary
4. Can Emerging Market Bank Regulators Establish Credible Discipline? The Case of Argentina, 1992-99, Charles W. Calomiris and Andrew Powell
Comment: Douglas W. Diamond
Discussion Summary
5. Dimensions of Credit Risk and Their Relationship to Economic Capital Requirements, Mark Carey
Comment: Patricia Jackson
Discussion Summary
6. Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms, Randall S. Kroszner and Philip E. Strahan
Comment: Jeremy C. Stein
Discussion Summary
7. Synergies between Bank Supervision and Monetary Policy: Implications for the Design of Bank Regulatory Structure, Joe Peek, Eric Rosengren, and Geoffrey Tootell
Comment: Ben S. Bernanke
Discussion Summary
8. Did U.S. Bank Supervisors Get Tougher during the Credit Crunch? Did They Get Easier during the Banking Boom? Did It Matter to Bank Lending? Allen N. Berger, Margaret K. Kyle, and Joseph M. Scalise
Comment: Stephen G. Cecchetti
Discussion Summary
Introduction—Frederic S. Mishkin
1. Banking Systems around the Globe: Do Regulation and Ownership Affect Performance and Stability? James R. Barth, Gerard Caprio Jr., and Ross Levine
2. Supervising Large Complex Banking Organizations: Adapting to Change, Lawrence H. Meyer
3. Market Discipline in the Governance of U.S. Bank Holding Companies: Monitoring versus Influencing, Robert R. Bliss and Mark J. Flannery
Comment: Raghuram G. Rajan
Discussion Summary
4. Can Emerging Market Bank Regulators Establish Credible Discipline? The Case of Argentina, 1992-99, Charles W. Calomiris and Andrew Powell
Comment: Douglas W. Diamond
Discussion Summary
5. Dimensions of Credit Risk and Their Relationship to Economic Capital Requirements, Mark Carey
Comment: Patricia Jackson
Discussion Summary
6. Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms, Randall S. Kroszner and Philip E. Strahan
Comment: Jeremy C. Stein
Discussion Summary
7. Synergies between Bank Supervision and Monetary Policy: Implications for the Design of Bank Regulatory Structure, Joe Peek, Eric Rosengren, and Geoffrey Tootell
Comment: Ben S. Bernanke
Discussion Summary
8. Did U.S. Bank Supervisors Get Tougher during the Credit Crunch? Did They Get Easier during the Banking Boom? Did It Matter to Bank Lending? Allen N. Berger, Margaret K. Kyle, and Joseph M. Scalise
Comment: Stephen G. Cecchetti
Discussion Summary