Published online by Cambridge University Press: 06 July 2010
The more extensive a man's knowledge of what has been done, the greater will be his power of knowing what to do.
DisraeliIt ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.
Mark TwainGOALS AND BOUNDARIES
Goals
This chapter assesses the book's central question: which bank regulatory and supervisory strategies work best? As stressed in Chapter 1, three inter-related motivations drive this chapter's analyses. First, because banks importantly influence economic growth, poverty alleviation, and economic volatility (Levine, 2005a), it is critical to identify those policies that encourage efficient bank operations. Consequently, this chapter provides the first broad, cross-country assessment of a variety of regulations to determine which ones enhance bank development, stability, efficiency, performance, and the degree of corruption in bank lending. Second, the Basel Committee routinely makes influential recommendations for countries to adopt regarding bank regulatory and supervisory strategies. As described in Chapter 2, it most recently recommended Basel II, which is based on three pillars: capital standards, official supervision, and market discipline, respectively. This chapter provides the first cross-country assessment of the relative merits of these three “pillars.” Third, our inquiry about what works best in bank regulation and supervision bears directly on the epic debate on the proper role of government in an economy. From before the Federalist Papers, philosophers, political scientists, and economists have warned about the adverse repercussions of unchecked power of any branch of government.
To save this book to your Kindle, first ensure no-reply@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.
Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.
Find out more about the Kindle Personal Document Service.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.
To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.