Regulatory Compliance and Bank Efficiency

This project is in collaborating with Sami Ben Naceur (International Monetary Fund Institute), Rym Ayadi(Centre for European Policy Research) and Barbara Casu (Cass Business School).  Using an international sample of commercial banks and Basel Core Principles compliance data (henceforth BCP) supplied by the IMF a non-parametric efficiency analysis applied using modern econometric techniques investigates whether compliance with these BCPs is associated with bank operating efficiency.  This project will produce two pieces of work.  In the first instance a peer-reviewed IMF working paper will be produced by September 2014.  In the second instance a peer-review academic paper will be produced that will target a journal of international standing.

Abstract from IMF working paper

The recent crisis underscored the importance of regulation and supervision that promotes a well-functioning banking system that channels efficiently financial resources into investments,  In this paper, we contribute to the on-going policy debate by assessing whether compliance with international regulatory standard and protocols enchances bank operating efficiency.  We focus specifically on the adoption of international capital standards and the Basel Core Principles for Effective Bank Supervision (BCP). Using an international sample of publicly listed banks the relationship between bank efficiency and regulatory compliance is investigated using the (Simar and Wilson 2007) double bootstrapping approach.  

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