Can Regulation and Supervision Promote Bank Development?A Cross-country Empirical Study and Its Implication to China

摘要

Under the framework of a “grabbing hand” government model, this paper explores how various banking regulation instruments affect bank development. Applying latest data covering 131 countries in the world, we answer what the appropriate regulation that will promote banking system to develop stably is. Our results indicate that China, different from most cases, should cautiously relax its entry restrictions particularly to foreign banks, restrain banks from engaging in securities, insurance and other activities, set up explicit deposit insurance scheme, and give positive play to official supervision, on account of China’s low bank capital-asset ratio and immature non-official supervisory system. These results might provide some helpful instructions for the newly- established China Banking Regulatory Commission (CBRC) to conduct bank regulation reform.