Prof. Jayanth R. Varma’s Financial Markets Blog

A blog on financial markets and their regulation

Advantages of Single Regulator

An interesting IMF
Working Paper
by Martin Cihak and Richard Podpiera
present evidence that single regulators (covering banking, securities and
insurance) are associated with higher quality of supervision and with
higher consistency of regulation across the three sectors. One of the
problems that they face is that integrated regulators are typically
found in more developed countries with more mature regulatory
environments. They control for both of these in their
study. Controlling for income reduces the effect a great deal
but it remains
positive and in many cases, it also remains statistically
significant.

The authors measure quality of regulation by conformance to various
international standards on core principles of regulation.

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