bank regulation

[Azazello1313]

according to two IMF economists

 

All in all, we do not find support for the hypothesis that better compliance with BCPs [basel Core Principles] results in sounder banks as measured by Z-scores [the number of standard deviations by which bank returns have to fall to wipe out bank equity]. This result holds after controlling for the macroeconomic environment, institutional quality, and bank characteristics. We also fail to find a significant relationship when we consider different samples, such a sample of rated banks only, a sample including only commercial banks, and samples including only the largest financial institutions. In an additional test, we calculate aggregate Z-scores at the country level to try to capture the stability of the system as a while rather than that of individual banks, but also this measure of soundness is not significantly related to overall BCP compliance.

 

This is an unusual sort of paper, in that it tries to look for evidence that regulation works. Ordinarily, economists proceed directly from the observation that market results are imperfect to the conclusion that regulation is the solution. Faith-based regulation, as opposed to evidence-based regulation.

 

any thoughts on this, wiegie?

[rattsass]

according to two IMF economists

 

 

 

This is an unusual sort of paper, in that it tries to look for evidence that regulation works. Ordinarily, economists proceed directly from the observation that market results are imperfect to the conclusion that regulation is the solution. Faith-based regulation, as opposed to evidence-based regulation.

 

any thoughts on this, wiegie?

 

I just hope the IMF is there for all of us when our economy collapses. Maybe issue us all a coupon to get a loan for one of them formaldahyde trailers.