CEU Electronic Theses and Dissertations, 2015
| Author | Gantumur, Tserennadmid |
|---|---|
| Title | Essential components of an effective bank regulatory and supervisory framework against crisis |
| Summary | This paper analyzes essential components of an effective bank regulatory and supervisory framework against crisis. Among broad ranges of bank law covering different aspects and scopes of banking businesses, some of them are employed as a macroeconomic policy tools to prevent financial crises that cause great destructions to the whole economy. These regulatory and supervisory frameworks include deposit insurance, capital adequacy requirement and reserve ratio requirement. While these three elements have their own distinctive functions that address different risks and threats faced by banks that may lead to the crisis situation, they are employed together as a prudential regulatory package in order to maximize its efficiency. Each of these elements has its own weaknesses due to the coverage and scope of them and due to the fact that there are negative regulatory externalities arise from them, therefore they are usually implemented together as a package. Deposit insurance arrangement is a commonly adopted technic by most of the countries and the Basel Committee recommends it. This is an effective precautionary arrangement against crisis because it can avert wide spread bank run by preserving public trust in the system. However, its weakness stands in a negative regulatory externality it causes, namely moral hazard. Capital adequacy requirements and reserve ratio requirements are micro-prudential regulations that are widely applied to ensure safe business conducts by banks and that address different risks that banks suffer from. By employing these requirements, countries can keep building blocks - individual banks in the system safe and sound and they can deal with the negative regulatory externalities arise from deposit insurance arrangements. |
| Supervisor | ANDRZEJ BANIAK and CATERINA SGANGA |
| Department | Economics MA |
| Full text | https://www.etd.ceu.edu/2015/gantumur_tserennadmid.pdf |
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