D4 Published development or research report or study
“One size does not fit all” - institutional determinants of financial safety net effectiveness

List of Authors: Aleksandra Masłowska-Jokinen, Anna Matysek-Jędrych
Publisher: Narodowy Bank Polski
Place: Warsaw
Publication year: 2016
Title of series: NBP Working Paper
Number in series: 240
Issue number: 240
ISSN: 2084-624X
eISSN: 2084-624X


main objective of the study is to identify both similarities and differences
among seemingly homogenous countries (OECD) in respect to their safety net design
and a supervisory role played by central banks. This goal is achieved using an
extensive data set, describing financial supervisory institutions between
2000-2013, hence including recent modifications in response to global financial
crisis. The data show the existence of similar supervisory standards in both
crisis- and non-crisis countries. Whether it is a presence of a single
supervisory authority, allocation of macroprudential responsibilities in a
country, or implementing capital adequacy requirements, while working well in
certain countries, did not make others immune to a crisis. At the same time,
data show that non-crisis countries implemented stricter rules than those in
crisis-countries, and that this process started way before the burst of the Global
Financial Crisis. Often, these more rigorous rules were observed in countries
with past crisis experience, indicating an importance of learning mechanism.
With empirical analysis, we prove that certain basic safety net elements (obligatory
reserve requirements or sufficient coverage of deposit insurance scheme), as
well as high level of central bank financial transparency are negatively
correlated with the speed of credit growth. Based on our results and discussion
on previous empirical analyses we give recommendations for institutions
involved in the financial safety net.

Last updated on 2019-20-07 at 04:17