The Economics of Supranational Bank Supervision

Speaker: Professor Thorsten Beck, Cass Business School
Chair: Professor Victor Murinde, SOAS University of London
Time: Wednesday, 8 January 2020, 13:00-15:00
Venue: S314 (Paul Webley Wing, Senate House), SOAS University of London

Abstract
Using novel data on supranational agreements we document that there are large differences in the propensity and the intensity with which countries cooperate in the supervision of their banks. Exploiting bank-level variation arising from the geographical dispersion of cross-border banks and supervisory cooperation, we show that such cooperation is effective in improving bank stability. The effectiveness is higher for smaller and less complex banks, and when supervisors are more stringent and have access to higher quality information. We also provide evidence that the incidence and intensity of supervisory cooperation vary across country pairs in line with differences in economic costs and benefitts of cooperation.

Keywords: Supranational supervisory cooperation; cross-border banking; externalities
JEL codes: G1, G2

Seminar Presenter

Thorsten Beck is professor of banking and finance at Cass Business School in London. He is also a research fellow of the Centre for Economic Policy Research (CEPR) and the CESifo. Previously he worked in the research department of the World Bank and has also worked as consultant for – among others -  the European Central Bank, the Bank of England, the BIS, the IMF, the European Commission, and the German Development Corporation. His research, academic publications and operational work have focused on two major questions: What is the relationship between finance and economic development? What policies are needed to build a sound and effective financial system? Recently, he has concentrated on access to financial services, including SME finance, as well as on the design of regulatory and bank resolution frameworks. In addition to numerous academic publications in leading economics and finance journals, he has co-authored several policy reports on access to finance, financial systems in Africa and cross-border banking. His country experience, both in operational and research work, includes Bangladesh, Bolivia, Brazil, China, Colombia, Egypt, Mexico, Russia and several countries in Sub-Saharan Africa. In addition to presentation at numerous academic conferences, including several keynote addresses, he is invited regularly to policy panels across Europe.