Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/24445 
Year of Publication: 
2002
Series/Report no.: 
ZEW Discussion Papers No. 02-66
Publisher: 
Zentrum für Europäische Wirtschaftsforschung (ZEW), Mannheim
Abstract: 
The system of banking supervision in Europe is undergoing substantial reforms. According to Stigler?s capture theory regulation often follows the preferences of producers. Therefore, the interests of the financial industry might be a major driving force for the ongoing supervisory reform debate. This paper identifies possible interests of the regulated industries: Either they might favour strict supervision to create barriers for entry and thus to reduce competitive pressure in their market. Or they might use their political influence to press for a lax and low-cost supervisory system. A cross-country data base on supervisory systems and financial structure allows the application of a three-step testing procedure. It turns out that the private interest view on regulation is indeed relevant and that the data is more compatible with a ?preference for laxity? than with a ?barriers to entry? view.
Subjects: 
banking regulation and supervision
capture theory
political economy
JEL: 
G28
Document Type: 
Working Paper

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