How Recurrent Bank Failures Contributed to the Under Development of the Nigerian Economy

If post-communist countries realized marketized bank–state ties through transition and international pressure to privatize their banks with foreign capital, western Eurozone states have more recently come under pressure to follow suit. European Banking Union centralized bank supervision and introduced a single resolution board at the expense of national authority. Thus under banking union, national regulatory and supervisory forbearance was curbed; barriers to banking market entry were no longer the purview of national authorities; disproportionate bank lending to one’s own sovereign would be discouraged; and bank bondholders, creditors and depositors—i.e. market actors—paid the price for bank failures first, before governments and taxpayers. While European Banking Union put the euro on stronger foundations, it also curbed national economic policy discretion and limited tools for adjustment. Taking Italy, Portugal, Spain and Germany as examples, this chapter explains why and in what policy areas Eurozone states’ sovereignty clashed with banking union.

Download Full-text

Central Banks and the New Regulatory Regime for Banks

The Oxford Handbook of the Economics of Central Banking ◽

10.1093/oxfordhb/9780190626198.013.17 ◽

2019 ◽

pp. 502-527

Author(s):

David T. Llewellyn

Keyword(s):

Central Banks ◽

Employee Attitudes ◽

Social Costs ◽

Regulatory Regime ◽

Bank Failures ◽

The Social ◽

Global Banking ◽

Regulated Firms ◽

And Behavior ◽

Attitudes And Behavior

The most serious global banking crisis in living memory has given rise to one of the most substantial changes in the regulatory regime of banks. While not all central banks have responsibility for regulation, because they are almost universally responsible for systemic stability, they have an interest in bank regulation. Two core objectives of regulation are discussed: lowering the probability of bank failures and minimizing the social costs of failures that do occur. The underlying culture of banking creates business standards and employee attitudes and behavior. There are limits to what regulation can achieve if the underlying cultures of regulated firms are hazardous. There are limits to what can be achieved through detailed, prescriptive, and complex rules, and when, because of what is termed the endogeneity problem, rules escalation raises issues of proportionality, a case is made for banking culture to become a supervisory issue.

Download Full-text