Measuring the Quality of the Relationship Between Supervisory Authorities and Banks - Implications of an Assessment of the German Banking Sector

Journal of Risk Management in Financial Institutions, Vol. 2, No. 1, 2008

Posted: 21 Jun 2007 Last revised: 8 Apr 2021

See all articles by Stephan Paul

Stephan Paul

Ruhr University of Bochum - Faculty of Economics

Stefan Stein

University of Bochum - Department of Finance and Banking

André Uhde

University of Paderborn - Faculty of Business Administration and Economics - Department of Taxation, Accounting & Finance

Date Written: July 15, 2010

Abstract

The globe is still far away from a consistent implementation of a fully-fledged harmonized banking regulatory framework. The reason for this heterogeneity mainly results from (a) historically grown and hence different country-specific traditions in banking regulation and supervision, (b) different national emphasis of regulatory sub-goals such as efficiency or the protection and promotion of national financial markets and (c) different institutional settings and conditions.

In this context, studies on the banking industry's assessment of supervisory processes and instruments shed a brighter light on the question of how effectively and efficiently international banking regulatory frameworks like the New Basle Capital Accord ("Basel II") or the Capital Requirements Directive (CRD) for Europe are implemented by each nation state. By this means evaluation studies help to reveal the most important country-specific obstacles to har-monization emerging from different supervisory practices.

In November 2005 the Federal Government of Germany commissioned an economic analysis to evaluate the banking sector's assessment concerning supervisory processes and instruments carried out by Germany's official authorities BaFin and Bundesbank. This study should determine options to further optimizing supervision, reducing regulatory burden and bureaucracy or even more restricting supervision. The results of this representative survey were finally published at the end of 2006. This paper initially presents the most important findings by analyzing significant dif-ferences of assessments between various banking groups, empirically evaluates significant drivers of a bank's overall satisfaction with banking supervision and then drafts out a selection of proposals for an improvement in banking regulation and supervision in Germany. Finally, aspects of further research are discussed.

Keywords: banking regulation, banking supervision, supervisory structure, harmonization

JEL Classification: F36, G21, G28, O16, O19

Suggested Citation

Paul, Stephan and Stein, Stefan and Uhde, André, Measuring the Quality of the Relationship Between Supervisory Authorities and Banks - Implications of an Assessment of the German Banking Sector (July 15, 2010). Journal of Risk Management in Financial Institutions, Vol. 2, No. 1, 2008, Available at SSRN: https://ssrn.com/abstract=995673

Stephan Paul

Ruhr University of Bochum - Faculty of Economics ( email )

Ruhr University of Bochum
Faculty of Economics
Bochum, DE 44780
Germany

Stefan Stein (Contact Author)

University of Bochum - Department of Finance and Banking ( email )

Bochum, DE 44780
Germany

André Uhde

University of Paderborn - Faculty of Business Administration and Economics - Department of Taxation, Accounting & Finance ( email )

Warburger Str. 100
D-33098 Paderborn
Germany

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