دانلود مقاله ISI انگلیسی شماره 23125
عنوان فارسی مقاله

آیا سیاست پولی بر نقش بانک مرکزی در نظارت بر بانک تاثیر می گذارد؟

کد مقاله سال انتشار مقاله انگلیسی ترجمه فارسی تعداد کلمات
23125 2005 28 صفحه PDF سفارش دهید محاسبه نشده
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پس از پرداخت، فوراً می توانید مقاله را دانلود فرمایید.
عنوان انگلیسی
Does monetary policy affect the central bank's role in bank supervision?
منبع

Publisher : Elsevier - Science Direct (الزویر - ساینس دایرکت)

Journal : Journal of Financial Intermediation, Volume 14, Issue 1, January 2005, Pages 58–85

کلمات کلیدی
بانک مرکزی - نظارت بانک - سیاست های پولی -
پیش نمایش مقاله
پیش نمایش مقاله آیا سیاست پولی بر نقش بانک مرکزی در نظارت بر بانک تاثیر می گذارد؟

چکیده انگلیسی

This paper examines whether monetary policy responsibilities alter the central bank's role as a bank supervisor. The analysis focuses on the United States, where the Federal Reserve System shares supervisory duties with the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation. Among the three institutions, the Fed is the only one responsible for monetary policy. Hence, the Fed's supervisory behavior—as captured by formal actions—is compared with the behavior of the other two agencies. The results suggest that the Fed's monetary policy responsibilities do alter its bank supervisory behavior: indicators of monetary policy affect the supervisory actions of the Fed, but do not affect the actions of the other two agencies.

مقدمه انگلیسی

In most countries, the central bank performs an important role in the management of the financial system. However, since the main task of the central bank is to maintain price stability, the assignment of other “optional tasks,” such as bank supervision, has been subject to debate amongst academics and policymakers for several years. For example, policymakers in the United Kingdom, Japan, and several Scandinavian countries recently removed their central bank from its role in bank supervision, while (after a long debate) the European Central Bank was given no supervisory responsibilities. In the United States, where the Federal Reserve System has only partial responsibility for the supervision of banks, there were various proposals to the Congress to consolidate all supervisory duties under a new single federal regulator, separate from the Federal Reserve. In the literature, several arguments have been developed against and in favor of combining the two functions under the same agency.1 These arguments assume that in one way or another the central bank's supervisory duties affect monetary policy and vice versa. To date, however, there is little empirical evidence establishing the existence of such cross-effects, since data on bank supervision has been—and for the most part is still—confidential in most countries. Given the data limitations, most of the early studies provide only indirect evidence of such cross-effects. For example, Heller (1991) and Goodhart and Schoenmaker (1992) compare the inflation rates achieved by central banks with and without bank supervisory duties. They find that countries with central banks that have supervisory duties experience on average higher inflation rates, and interpret this as evidence supporting the “conflict of interest” hypothesis. However, higher inflation rates under a combined regime are not necessarily the result of the central bank being distracted by supervisory considerations. Moreover, cross-country comparisons using descriptive statistics are naturally impaired by differences across countries in the structures of their financial systems as well as differences in the timing and magnitude of their business cycles. This paper examines whether monetary policy duties affect the central bank's role in bank supervision, and if so, how? This question is addressed by exploiting the segmented structure of the US bank regulatory and supervisory system. Specifically, all insured commercial and savings banks in the United States have one of the following agencies as their primary federal supervisor: the Federal Deposit Insurance Corporation (FDIC), the Office of the Comptroller of the Currency (OCC), or the Federal Reserve System (Fed). While the Fed's primary responsibility is to conduct monetary policy, the other two agencies have no such duty. Hence, using the FDIC and the OCC as a control group, the supervisory behavior of the Fed is compared with the behavior of the other two agencies. The analysis focuses on a particular aspect of bank supervision: the imposition of formal regulatory actions (i.e., cease and desist orders and written agreements) against banks in financial distress. This is an important aspect of bank supervision for which data can be constructed using publicly-available information and for which the general procedures and criteria of imposition provide a common basis for comparison.2 In order to perform this comparison, a unique and rich data set is created. Information collected from the formal action documents is combined with bank-level indicators of financial performance (constructed using the Call Report Data) and indicators of the aggregate and regional economy. The resulting unbalanced panel includes the “universe”: all insured commercial and savings banks in the United States and all formal actions issued against these types of institutions during the period 1990:I–1998:IV. The estimation results suggest that the Fed's monetary policy duties do alter its bank supervisory behavior. In particular, the stance of monetary policy—as captured by the federal funds rate, the paper-bill spread, the Strongin measure, and other short-term interest rates—affects the supervisory behavior of the Fed, but does not affect the behavior of the other two agencies. Since indicators of monetary policy matter only for the Fed, it is unlikely that they simply capture the effect of the business cycle. However, this possibility is formally tested in the sensitivity analysis by examining whether any of the “traditional” indicators of the business cycle (e.g., the growth rate of real GDP and the change in the national unemployment rate) affect bank supervision in the same way. It turns out that these indicators matter for all three supervisors and not just for the Fed. Moreover, in another robustness check, it is shown that the Fed's distinctive behavior cannot be attributed to monetary policy having a greater impact on the particular banks that it supervises; the results stay the same even after controlling for each bank's exposure to interest-rate risk. The sign on the estimated coefficient of monetary policy indicates that when the Fed tightens monetary policy, it becomes less strict in bank supervision (i.e., an increase in interest rates or a decrease in reserves is associated with a lower probability of intervention). One possible explanation is that the Fed tends to be less strict on bank supervision in order to compensate banks for the extra pressure it puts on them when it tightens monetary policy. The Fed might be interested in compensating troubled banks either because it is concerned about possible adverse effects from bank failures on its reputation or because it is concerned about possible knock-on effects. After all, the Fed is responsible for maintaining the stability of the financial system and it is responsible for the supervision of some of the biggest banks in the United States. Finally, the results also suggest that the scenario expressed by Goodhart and Schoenmaker (1992), in which the Fed uses its role in bank supervision to reinforce or protect the objectives of monetary policy, is not supported by the data. If it were, a monetary policy tightening would have been associated with a higher probability of intervention. It is important to point out that establishing such cross-effects does not necessarily imply that the two functions should be separated or that they should be kept together. To answer this question would require to take into account the effect of all possible cross-effects in a theoretical framework that would allow for welfare analysis. This, however, is beyond the purpose of this paper. As mentioned earlier, the paper's main objective is to investigate whether and how monetary policy affects bank supervision when the two functions are under the same agency. This is important since it could guide theory by establishing relevant empirical facts. The methodology and the data employed here improve upon previous studies in at least two ways. First, the paper escapes the usual criticisms of cross-sectional studies by limiting the analysis to a single country, the United States, where the segmented structure of its regulatory and supervisory system provides an ideal framework for such a study. Second, the construction and use of a unique data set on formal actions allows a direct test of the behavior of bank supervisors. The paper is organized as follows. Section 2 reviews the main arguments developed in the literature for and against the separation of the monetary and supervisory functions. Description and critical evaluation of existing empirical findings are also provided. Section 3 describes in detail the methodology and the data used. Section 4 describes and evaluates the estimation results, provides sensitivity analysis, and evaluates the economic significance of the paper's main result. Conclusions follow in Section 5.

نتیجه گیری انگلیسی

This paper examines whether and how monetary policy responsibilities affect the central bank's role as a bank supervisor. The methodology and the data employed improve upon previous studies in at least two ways. First, the paper avoids the usual criticisms of cross-sectional studies by limiting the analysis within a single country. The US bank regulatory and supervisory system is ideal for such a study because of its segmented structure. Second, the construction and use of a unique data set on formal regulatory actions allows a direct test of the behavior of bank supervisors. The estimation results indicate that the Fed's monetary policy responsibilities do alter its bank supervisory role, at least for the United States during the sample period and for the particular aspect of bank supervision examined here. In particular, the stance of monetary policy affects the supervisory behavior of the Fed, but does not affect the behavior of the other two agencies. Since indicators of monetary policy matter only for the Fed, it is highly unlikely that they simply capture the effect of the business cycle. However, this possibility is formally tested in the sensitivity analysis by examining whether any of the “traditional” indicators of the business cycle affect bank supervision in the same way. It turns out that indicators of the business cycle, such as the growth rate of real GDP and the change in the national unemployment rate, matter for all three supervisors and not just for the Fed. Similar tests show that the results are not due to differences across the three groups of banks in their exposure to interest-rate risk. The estimation results indicate that when the Fed tightens monetary policy, it becomes less strict in bank supervision. One explanation is that the Fed compensates banks for the extra pressure it puts on them, either because it views them as its constituency or because it is concerned about the microstability of the financial sector. In addition, the sign on the estimated coefficient of monetary policy also indicates that the Fed is not using its role in bank supervision to reinforce the objectives of monetary policy (i.e., it does not try to get a “big bang for the buck”). Although the analysis and discussion so far focuses exclusively on whether and how monetary policy alters the Fed's behavior in bank supervision, it is worth noting that this study is related to a much broader issue. In particular, over the years, major conflicts and disagreements emerged among the three agencies (e.g., Robertson, 1966 and Hanc, 1997). The reason for differences might be related to distinct incentives inherent in the structure and additional responsibilities of each agency. The OCC, the FDIC, and the Fed can be thought of as three economic agents maximizing different objective functions. While they are each responsible for promoting “safe and sound” banking practices, each agency has additional responsibilities that might affect its regulatory and supervisory role. This is not to say that these are necessarily “bad” objectives. As mentioned earlier, a problem would arise only if their institutional priorities differ from those of the society at large. However, more research is necessary before we are in a position to know whether the current structure creates suboptimal objectives for each one of these agencies.

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