The scramble to expand deposit guarantees in Europe in response to recent financial turmoil confirms that the on-going integration of European financial markets requires closer coordination of prudential policies and financial safety nets. We study the optimal design of prudential supervision...

This paper analyzes the determinants of bank acquisitions both within and across 25 members of the European Union (EU-25) during the period 1997-2004. Our results suggest that poorly managed banks (those with a high cost-to-income ratio) and larger banks are more likely to be acquired by other...

Over the past years, several countries around the world have adopted a system of prudential prompt corrective action (PCA). The European Union countries are being encouraged to adopt PCA by policy analysts who explicitly call for its adoption. To date, most of the discussion on PCA has focused...

This paper analyzes the determinants of bank acquisitions both within and across countries in the EU-25 over the period 1997-2004. The findings of this paper are broadly in line with those of the academic literature on the subject, which are mainly based on the US experience. Our results suggest...

In spite of the conspicuous use of the Internet as a delivery channel, there is a relative dearth of empirical studies that provide a quantitative analysis of the impact of the Internet on banks' financial performance. This paper attempts to fill this gap by identifying and estimating the impact...

The EU is deliberating the introduction of an explicit quot;European mandatequot; for financial sector supervisors to supplement national mandates. Suggestions are made on (i) the formulation of a European mandate; (ii) the policy areas to which it should apply; (iii) which institutions should be...

The volume of credit extended by a bank can be an informative signal of its abilities in loan selection and management. It is shown that, under asymmetric information, banks may therefore rationally lend more than they would otherwise in order to demonstrate their quality, thus negatively...

Banks will want to influence the bank regulator to favor their interests, and they typically have the means to do so. It is shown that such 'regulatory capture' in banking does not imply ineffectual regulation; a 'captured' regulator may impose very tight, costly prudential requirements to...

It is shown that the inefficiencies created by the quot;softquot; budget constraint, enjoyed by enterprises in Eastern Europe and elsewhere, will continue so long as governments are unable credibly to threaten not to bail out loss-makers. Commitment to a quot;hardquot; budget constraint can best...

The profound structural reform underway in Eastern Europe has revealed the weakness of the banking sector there; macroeconomic stability and other reforms are thereby threatened. After an overview of recent developments in the banking sectors of these countries, a model is developed that...