Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Monday, January 30, 2006

Rethinking Bank Regulation

James R. Barth, Gerard Caprio Jr., and Ross Levine (2006), Rethinking Bank Regulation; Till Angels Govern_ (Cambridge: Cambridge University Press: 0521855764).

Rick Mishkin says:

Rethinking Bank Regulation is an important book. It provides striking evidence (using a unique data set created at the World Bank) that strengthening the discretionary powers of prudential supervisors in countries with weak institutional environments leads to a lower level of bank development, greater corruption in lending, and banks that are less safe and sound. Following the Basel II recommendation of strengthening supervisory powers, therefore, may do more harm than good in developing countries, unless it is accompanied by substantial progress in institutional development. This book provides an important warning to policy makers that what works for advanced countries may not work for developing countries.

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