Working Paper: CEPR ID: DP12764
Authors: Thorsten Beck; Consuelo Silva Buston; Wolf Wagner
Abstract: We document large variation in the propensity and the intensity in which countries cooperate in the supervision of banks. We show that these variations can be linked to differences in cooperation gains. Using hand-collected data on supranational agreements for 4,278 country pairs during the period 1995-2013, we find that proxies for bilateral cooperation gains a) increase the likelihood of cooperation, b) accelerate the adoption of cooperation, c) make intense forms of cooperation more likely. An analysis of regional cooperation shows that their make-up, as well as their evolution, is broadly consistent with predicted cooperation gains. Our findings suggests that a uniform approach to supranational supervision is not necessarily desirable as countries diff er considerably in the extent to which they bene fit from cooperation.
Keywords: Supranational supervisory cooperation; Cross-border banking; Externalities
JEL Codes: G1; G2
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Higher bilateral externalities (D62) | Increase likelihood of supervisory cooperation (E61) |
| Greater heterogeneity (D29) | Decrease likelihood of cooperation (C72) |
| Bilateral cooperation gains (F55) | Increase likelihood of cooperation (C71) |
| Bilateral cooperation gains (F55) | Accelerate adoption of cooperation agreements (J54) |
| High externalities and low heterogeneity (D62) | More likely to adopt robust supervisory arrangements (G28) |