Crisis Prevention and Crisis Management: The Role of Regulatory Governance

Das, Udaibir; Quintyn, Marc

doi:10.5089/9781451857948.001

Cited by 32 publications

(37 citation statements)

References 8 publications

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“…Politicians are accountable for their political agenda whereas the RSB is not directly accountable to electorate and may deviate from the public opinion in exercising its independent authority. The power given to RSB is likely to create a principal agent problem when RSB has a different objective function than its principal (Das & Quintyn, 2002).…”

Section: Independency Of Regulatory and Supervisory Body: Whither Desmentioning

confidence: 99%

“…Requirement for certain level of transparency limits RSB's self-interested actions and provides checks on the RSB to pursue its predefined objectives. In addition to these features, integrity among RSB's staffs needs to be provided in order to ensure that the RSB's staffs can collectively pursue institutional goals (Das & Quintyn, 2002). Moreover, Abrams & Taylor (2000) emphasize that the objectives of RSB need to be defined clearly and the RSB needs to be equipped with adequate resources and effective enforcement powers along with the provision of legal protection for its actions.…”

Section: Independency Of Regulatory and Supervisory Body: Whither Desmentioning

confidence: 99%

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Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey

Regulation

Aysan

2006

SSRN Journal

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Recent financial crises highlight weaknesses in financial markets and the need for regulatory and supervisory bodies (RSB) to improve the stability of financial markets. Currently, international institutions like the IMF and the World Bank place the independent RSB among their principle policy recommendations to developing countries. This paper acknowledges the importance of independent RSB for the proper functioning of financial markets. However, this paper also points out the preconditions to establish independent RSB. Unless certain prerequisites are satisfied, policy recommendations to construct an independent RSB are doomed to fail. The recent Turkish experience is provided as a case study to elucidate this conclusion. This paper first presents the arguments for independent RSB and the policy recommendations in institution building for stronger financial system. Then, the background of Turkish experience for independent RSB is provided. Finally, we analyze the primary reasons for the deficient performance of Turkish RSB over the last five years in an attempt to provide actual lessons for the future institutional reforms.

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Section: Independency Of Regulatory and Supervisory Body: Whither Desmentioning

confidence: 99%

Section: Independency Of Regulatory and Supervisory Body: Whither Desmentioning

confidence: 99%

Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey

Regulation

Aysan

2006

SSRN Journal

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“…26 Carmichael et al (2004). 27 Das and Quintyn (2002). and supervisory framework that is consistent and free of gaps. In particular, supervisors must be able to respond on a conglomerate-wide basis should serious problems occur in any part of the conglomerate.…”

Section: Arguments In Favour Of Integrated Financial Supervisionmentioning

confidence: 99%

Restructuring Financial Sector Supervision: Creating a Level Playing Field

Flamee¹,

Windels²

2008

Geneva Pap Risk Insur Issues Pract

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During the past few years, the financial industry has been characterised by an ongoing cross-sector and cross-border consolidation of financial institutions spanning banking, securities, and insurance institutions and the blurring demarcation of their respective products and instruments. Against the backdrop of these changes, the creation of a level playing field for financial services has become a key challenge for policy makers, regulators, and market participants alike. At different national and international levels, regulators, and supervisors have been responding to this challenge with a plethora of measures. This paper presents a number of initiatives at different supervisory levels in view of recent financial sector developments and discusses how the challenge of a level playing field is being tackled. Keywords: level playing field; globalisation; supervisory challenges; integrated supervision; cooperation Financial sector supervision in an era of changeThe ongoing cross-sector and cross-border consolidation of financial institutions including new financial conglomerates has led to a blurring of distinctions between financial sectors and national financial markets. 1 Against the backdrop of these changes, the creation of a level playing field for financial services has become a key challenge and a central point of attention for policy makers, regulators and market participants alike. A plethora of measures have been launched by many countries and organisations around the world in the desire to offer higher levels of competition, transparency, equal access and greater financial stability. The most notable example is the establishment of the European single market in financial services with the possibility to offer identical arrangements across the EU. To this end, the European Commission has launched a financial services policy, which clearly focuses on an integrated, open, inclusive and competitive financial market. 2 At a national level, many countries have been considering the institutional structures of financial regulation in order to safeguard a level playing field between financial institutions. For many years, the architecture of financial supervision reflected a traditional approach, with separate agencies for banking, securities and

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“…Existing literature suggests that regulatory problems, also involving regulatory forbearance, is one of the biggest issues with previous financial crisis in the U.S. For example, Das and Quintyn (2002) suggest that in nearly all financial crises of the past decade-East Asia, Ecuador, Mexico, Russia, Turkey and Venezuela-political interference in the regulatory and supervisory process, forbearance, weak regulations, and supervision have been mentioned as contributing factors to the depth and size of the systemic crises. Kawai et al (2003) argue that in the run up to the crisis, East Asian banks developed large asset-liability mismatchesunhedged foreign exchange borrowings invested in non-tradable sectors and short-term funds lent long into property-all of which left the banks vulnerable to exchange depreciations and to interest rate surges.…”

mentioning

confidence: 99%

“…To keep the discussion within limits, we will only underline the components of good regulatory/supervisory governance for financial engineering products. Das and Quintyn (2002) suggest that there are four components of good regulatory governance. These include (i) independence of the agency from political and industry interference; (ii) accountability; (iii) transparency; and (iv) integrity.…”

mentioning

confidence: 99%

Financial Engineering and Engineering of Financial Regulation

Coşkun¹

2011

SSRN Journal

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As observed at least in last two decades, financial engineering has not only changed the way of doing business in finance world, but also has changed daily life of average citizens in the leading economies. Structured products named as weapons of mass destruction in some post-crisis comments. But it is fair to say that few people could understand the nature and risks of these instruments before the crisis. By using literature review and case study analysis, the author analyses how financial regulation and supervision have failed to understand/manage the financial engineering products during/before the global financial crisis. In this context, we discuss the measures to enhance good regulatory governance in engineered products. We conclude however engineered products have important benefits to the global economy, regulatory/supervisory structure should be improved for better firm/system wide risk management. Secondly, there are four components to improve prudential regulatory/supervisory framework of structured products. Those are, timely/effectively action to the balance sheet problems, to increase the effectiveness of the risk management, to improve independence and quality of prudential regulation/supervision and to increase accountability of supervisors.

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Crisis Prevention and Crisis Management: The Role of Regulatory Governance

Cited by 32 publications

References 8 publications

Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey

Assessing the Preconditions in Establishing an Independent Regulatory and Supervisory Agency in Globalized Financial Markets: The Case of Turkey

Restructuring Financial Sector Supervision: Creating a Level Playing Field

Financial Engineering and Engineering of Financial Regulation

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