Abstract
Despite some convergence in regulation, the banking sectors of the SEMC suffer from weak deposit insurance, entry obstacles, political interference, and lack of legal rights. Deposit insurance systems in many of the SEMC are not explicit, leading to uncertainties in the provision of support to banks in case of default. Most of these banking systems do not align the banks’ incentives in risk-taking with those of taxpayers by implementing risk-based premiums. Barriers to entry into the sector and government ownership of banks are issues. Some of the SEMC have not caught up with the increase in supervisory independence in the EU-MED in the 2000s. While creditor protection remains weak, improvements in credit information have occurred since 2003 through the establishment of private credit bureaus with universal coverage.
This is a preview of subscription content, log in via an institution to check access.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Notes
- 1.
Aside from their potentially negative impact on entry, state-owned banks may fulfil an important developmental role. Rocha et al. (2010) show that in the MENA region, public banks compensate for the low private bank involvement in the SME sector, engaging in more risky loan issuance, although they seem to have less than sufficient capacity to manage such risks. Andrianova et al. (2010) provide evidence that government ownership of banks is associated with higher long-run growth rates in developing countries.
- 2.
Empirical evidence shows that the coverage limits and co-insurance practices serve to reduce the likelihood of bank failure substantially (Demirguc-Kunt and Detragiache 2002).
- 3.
In Egypt, although the legal framework allows for the establishment of an autonomous deposit insurance fund, no scheme has been set up yet.
- 4.
The example of the fall of Northern Rock in 2007, when the UK Treasury extended the existing guarantees – with a maximum payout of GBP31,700 at the time – to cover all deposits.
- 5.
References
Andrianova S, Demetriades P, Shortland AK (2010) Government ownership of banks, institutions and economic growth. Discussion Papers in Economics 11/01. Department of Economics, University of Leicester
Ayadi R, De Groen WP (2013) Banking and insurance in the GCC countries: is there regulatory convergence with the EU? Sharaka research paper 4, Istituto Affari Internazionali (IAI), Rome
Ayadi R, Arbak E, Ben Naceur S, Casu B (2011a) Convergence of bank regulation on international norms in the Southern Mediterranean: impact on performance and growth. Centre for European Policy Studies (CEPS), Brussels
Ayadi R, Arbak E, De Groen WP (2011b) Business models in European banking: a pre-and post-crisis screening. Centre for European Policy Studies (CEPS), Brussels
Barth JR, Caprio G Jr, Levine R (2001) The regulation and supervision of banks around the world: a new database, vol 2588, Policy research working papers. World Bank, Washington, DC
Barth JR, Caprio G Jr, Levine R (2004) Bank regulation and supervision: what works best? J Financ Intermed 13(2):205–248
Barth JR, Caprio G Jr, Levine R (2006) Rethinking bank supervision and regulation: till angels govern. Cambridge University Press, Cambridge
Barth JR, Caprio G Jr, Levine R (2008) Bank regulations are changing: but for better or worse? Policy research working papers. World Bank, Washington, DC
Barth JR, Caprio G Jr, Levine R (2012) The evolution and impact of bank regulations, vol 6288, Policy research working papers. World Bank, Washington, DC
Demirguc-Kunt A, Detragiache E (2002) Does deposit insurance increase banking system stability? An empirical investigation. J Monet Econ 49(7):1373–1406
Demirguc-Kunt A, Karacaovali B, Laeven LA (2005) Deposit insurance around the world dataset, vol 3628, Policy research working papers. World Bank, Washington, DC
Djankov S, McLiesh C, Shleifer A (2007) Private credit in 129 countries. J Financ Econ 84(2):299–329
European Commission (2010) Impact assessment accompanying document to the proposal on deposit guarantee schemes. Comm Staff Work Doc SEC(2010) 834/2
Haselmann R, Pistor K, Vig V (2010) How law affects lending. Rev Financ Stud 23(2):549–580
Jappelli T, Pagano M (2002) Information sharing, lending and defaults: cross-country evidence. J Bank Financ 26(10):2017–2047
La Porta R, Lopez-de-Silanes F, Shleifer A (1998) Law and finance. J Polit Econ 106(6):1113–1155
Levine R (1998) The legal environment, banks, and long-run economic growth. J Money Credit Bank 30(3):596–613
Madeddu O (2010) The status of information sharing and credit reporting infrastructure. MENA financial sector flagship report. Improving access to finance while maintaining stability in the Middle East and North Africa. World Bank, Washington, DC
Pagano M, Jappelli T (1993) Information sharing in credit markets. J Financ 48(5)
Rocha R, Farazi S, Khouri R, Pearce D (2010) The status of bank lending to SMEs in the Middle and North Africa region: the results of a joint survey of the Union of Arab Banks and the World Bank. World Bank, Washington, DC
Tahari A, Brenner P, Vrijer ED, Moretti M, Senhadji A, Sensenbrenner G, Sole J (2007) Financial sector reforms and prospects for financial integration in Maghreb countries. IMF Working Papers WP/07/125
Author information
Authors and Affiliations
Corresponding author
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2015 Springer International Publishing Switzerland
About this chapter
Cite this chapter
Ayadi, R., Arbak, E., De Groen, W.P. (2015). Convergence of Banking Regulation. In: Ayadi, R., Dabrowski, M., De Wulf, L. (eds) Economic and Social Development of the Southern and Eastern Mediterranean Countries. Springer, Cham. https://doi.org/10.1007/978-3-319-11122-3_13
Download citation
DOI: https://doi.org/10.1007/978-3-319-11122-3_13
Published:
Publisher Name: Springer, Cham
Print ISBN: 978-3-319-11121-6
Online ISBN: 978-3-319-11122-3
eBook Packages: Business and EconomicsEconomics and Finance (R0)