Institutions matter : financial surepvision architecture, central ban and path-dependence, general trends and the South Eastern European countries.
Authors
Donato Masciandaro
Marc Quintyn
Keywords:
Financial supervision, Central banks, Path-dependence, Political economy, South Eastern Europe, G18, G28, E58
Abstract
We propose a path-dependence approach to analyzing the evolution of the financial
supervisory architecture, focusing on the institutional role of the central
bank, and then apply our framework to describing the institutional settings in a
selected sample of countries. The policymaker who decides to maintain or reform
the supervisory architecture is influenced by the existing institutional setting in a
systematic way: the more the central bank is actually involved in supervision, the
less likely a more concentrated supervisory regime will emerge, and vice versa
(path-dependence effect). We test the path-dependence effect describing and
evaluating the evolution and the present state of the architecture of six national
supervisory regimes in South Eastern Europe (SEE ): Albania, Bulgaria, Greece,
Romania, Serbia, and Turkey. The study of the SEE countries confirms the postulated
role of the central bank in the institutional setting. In five cases the high involvement
of the central bank in supervision is correlated with a multi-authority
regime, while in one case a high degree of financial supervision unification is
related with low central bank involvement.