Have more strictly regulated banking systems fared better during the recent financial crisis?

Ahrend, Rudiger and Arnold, Jens and Murtin, Fabrice (2009): Have more strictly regulated banking systems fared better during the recent financial crisis?

Abstract

We assess whether during the recent financial crisis banking systems in countries with more stringent prudential banking regulation have proved more stable. We find indicators of regulatory strength to be relatively well correlated with the extent to which countries have escaped damage during the recent crisis, as measured either by the degree of equity value destruction in the banking sector or by the fiscal cost of financial sector rescue.

• Item Type: MPRA Paper
• Language: English
• Keywords: Prudential regulation; banking; stability; financial crisis; crisis cost; banking sector bail-out; banking share prices.
• Subjects: G - Financial Economics > G2 - Financial Institutions and Services > G28 - Government Policy and Regulation; G - Financial Economics > G0 - General > G01 - Financial Crises; G - Financial Economics > G2 - Financial Institutions and Services > G21 - Banks ; Depository Institutions ; Micro Finance Institutions ; Mortgages

References

Ahrend, R., Arnold, J. and F. Murtin (2009), “Prudential Regulation and Competition in Financial Markets”, OECD Economics Department Working Papers No. 735. http://dx.doi.org/10.1787/220117664431

Ahrend, R. (2010), “Monetary Ease – A Factor behind Financial Crises? Some Evidence from OECD Countries”, Economics, forthcoming.

IMF Fiscal Affairs Department (2009), “Companion Paper - The State of Public Finances: Outlook and Medium-Term Policies After the 2008 Crisis”. http://www.imf.org/external/np/pp/eng/2009/030609a.pdf

Ratnovski, L. and R. Huang (2009), “Why Are Canadian Banks More Resilient?”, IMF Working Paper No. 09/152. http://www.imf.org/external/pubs/ft/wp/2009/wp09152.pdf