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on Regulation |
| By: | Claire Giordano (Bank of Italy, Structural Studies Department) |
| Abstract: | The aim of the present note is to outline a general, but at the same time comprehensive, framework of the array of instruments that regulators can use in their activity of prudential regulation and supervision. Such a framework should be applicable to a variety of geographical and historical contexts and should aid cross-country and temporal comparisons concerning regulation activity. It is an extension and a reorganization of White's (2009) categorization, which in turn is built on Mishkin's (2001) work. The novelty of the resulting framework is a clear distinction between the tools, the aims and the institutional setting of prudential regulation. |
| JEL: | G18 G28 G38 |
| Date: | 2009–01 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:confpa:giordano&r=reg |
| By: | Ojo, Marianne |
| Abstract: | This paper considers areas in which the regulation and enforcement of accounting standards, and auditing standards in particular, have contributed to the recent global financial crisis. As well as the impact of such standards on pro cyclicality, the level of success achieved by international standard setters such as the Basel Committee for Banking Supervisors, relates to how effectively the accounting and audit standard setting is implemented. Collaboration between authorities such as CESR (Committee of European Securities Regulators), CEBS (Committee of European Banking Supervisors), and CEIOPS (Committee of European Insurance and Occupation Pensions Supervisors), as identified by the Report of the High Level Group on Financial Supervision in the EU, is also vital in determining how far the IASB is able to achieve its goals. As well as identifying the importance of convergence in contributing towards high quality audits and the consistent application of auditing and accounting standards, this paper also acknowledges the difficulties and challenges encountered in attempting to achieve a convergent framework. Furthermore, through a discussion of recommendations aimed at consolidating transparency and accounting, as proposed by the G20, ways in which accounting standards, and consequently the IASB, could contribute further to the improvement of transparency and accountability of the framework for fair value measurements and evaluation, are considered. However some factors still present sources of obstacles to the IASB’s attempts to realise the proposals put forward by the G20. This paper not only attempts to address such factors, but also to suggest ways in which the IASB, to an extent, could realise its goals. The IASB at present, has no enforcement mechanism. Enforcement actions are carried out at national level in various EU member states. Through a consideration of two enforcement regimes in Europe, namely, Germany and the UK, two related standards which govern enforcement in Europe, principles on which harmonisation of the institutional oversight systems in Europe may be achieved , and the vital contribution made by CESR and EFRAG (the European Financial Reporting Advisory Group), this paper will consider how enforcement could be implemented by the IASB at European level. Enforcement at European level is also important having regards to results of the peer review, which was carried out by CESR’s peer pressure group, the Review Panel, in July 2009. |
| Keywords: | regulation; auditors; standards; IASB; EFRAG; 2008/09 Financial Crisis |
| JEL: | K2 E0 G3 M4 |
| Date: | 2009–09–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17164&r=reg |
| By: | Randy Becker |
| Abstract: | This paper examines the extent of variation in regulatory stringency below the state level, using establishment-level data from the U.S. Census Bureau’s Pollution Abatement Costs and Expenditures (PACE) survey to estimate a county-level index of environmental compliance costs (ECC). County-level variation is found to explain 11-18 times more of the variation in ECC than state-level variation alone, and the range of ECC within a state is often large. At least 34% of U.S. counties have ECC that are statistically different from their states’. Results suggest that important spatial variation is lost in state-level studies of environmental regulation. |
| Keywords: | environmental costs, regulation, manufacturing, U.S. counties |
| JEL: | Q52 R52 H73 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:cen:wpaper:09-25&r=reg |
| By: | Jellal, Mohamed |
| Abstract: | In developing countries, empirical evidence suggests that labor unions entail a positive wage gap for unionized workers, in particular in monopolistic and publicly controlled firms. In this paper, we analyze how the presence of a labor union affects the regulation of a monopoly under asymmetric information. Since part of the informational rent left to the monopolistic firm benefits to the syndicate, we prove that the regulator is induced to lower the rent when the union has a large bargaining power. The net consumers' surplus can either increase or decrease with the firm's bargaining power depending on the firm's efficiency type. JEL |
| Keywords: | asymmetric Information ;Labor Union ; Monopolistic Firms ; Regulation Incentives |
| JEL: | J51 D82 D42 L43 |
| Date: | 2009–09–12 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:17279&r=reg |
| By: | Brigitte Unger; Frans van Waarden |
| Abstract: | Both in the US and in Europe anti money laundering policy switched from a rule- to a risk-based reporting system in order to avoid over-reporting by the private sector. However, reporting increased in most countries, while the quality of information decreased. Governments drowned in data because private agents feared sanctions for not reporting. This ``crying wolf'' problem. (Takats 2007) did not happen in the Netherlands, where the number of reports diminished but information quality improved. Reasons for this can be found in differences in legal institutions and legal culture, notably the contrast between US adversarial legalism and Dutch cooperative informalism. The established legal systems also provide for resistance to change. Thus lowering sanctions in order to reduce over-reporting may not be a realistic option in a legal system which traditionally uses deterrence by fierce criminal and private legal sanctions. Furthermore, a risk-based approach may not be sustainable in the long run, as litigation may eventually replace a risk-based approach again by a rule-based one, now with precise rules set by the courts. |
| Keywords: | money laundering, anti money laundering policy, risk based regulation, rules, standards, comparison of legal systems, tort law |
| JEL: | K00 K13 K14 K20 K41 H41 L51 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:use:tkiwps:0919&r=reg |
| By: | Henseleit, Meike; Kubitzki, Sabine; Herrmann, Roland |
| Abstract: | Consumers, particularly in industrialised countries, are concerned about the application of genetic engineering in food production. There are considerations in many nations worldwide to introduce legal regulations to label food as free of genetically modified organisms (GMOs) in order to enable producers to better promote such products. However, requirements for labelling food products as âGMO-freeâ can be very different, and therefore it is questionable whether consumersâ understanding of âGMO-freeâ is consistent with what certain labels actually can guarantee. We conducted a consumer survey in order to explore potential gaps between expectations of âGMO-freeâ food and production requirements in the case of the revised German regulation covering the labelling of foods as âGMO-freeâ. Our results indicate significant differences between consumersâ view and standards of production. |
| Keywords: | Genetic Engineering, Food Labelling, Consumer Survey, Food Consumption/Nutrition/Food Safety, |
| Date: | 2009–10 |
| URL: | http://d.repec.org/n?u=RePEc:ags:gaae09:53263&r=reg |
| By: | Johannes Schoder (Socioeconomic Institute, University of ZurichAuthor-Name: Michele Sennhauser; Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich) |
| Abstract: | This paper sheds light on some unexpected consequences of health insurance regulation that may pose a big challenge to insurers’ risk management. Because mandated uniform contributions to health insurance trigger risk selection efforts risk adjustment (RA) schemes become necessary. A good deal of research into the optimal RA formula has been performed (Ellis and Van de Ven [2000]). A recent proposal has been to add ”Hospitalization exceeding three days during the previous year” as an indicator of high risk (Beck et al. [2006]). Applying the new formula to an individual Swiss health insurer, its payments into the RA scheme are postdicted to explode, reaching up to 13 percent of premium income. Its mistake had been to successfully implement Managed Care, resulting in low rates of hospitalization. The predicted risk management response is to extend hospital stays beyond three days, contrary to stated policy objectives also of the United States. |
| Keywords: | Health insurance, regulation, risk adjustment, risk management |
| JEL: | I18 L51 H51 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0916&r=reg |
| By: | Patrick Eugster (Socioeconomic Institute, University of ZurichAuthor-Name: Michele Sennhauser; Socioeconomic Institute, University of Zurich); Peter Zweifel (Socioeconomic Institute, University of Zurich) |
| Abstract: | When premiums are community-rated, risk adjustment (RA) serves to mitigate competitive insurers’ incentive to select favorable risks. However, unless fully prospective, it also undermines their incentives for efficiency. By capping its volume, one may try to counteract this tendency, exposing insurers to some financial risk. This in term runs counter the quest to refine the RA formula, which would increase RA volume. Specifically, the adjuster, ”Hospitalization or living in a nursing home during the previous year” will be added in Switzerland starting 2012. This paper investigates how to minimize the opportunity cost of capping RA in terms of increased incentives for risk selection. |
| Keywords: | Health insurance, regulation, risk adjustment, risk management |
| JEL: | I18 L51 H51 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:soz:wpaper:0915&r=reg |
| By: | Federica Origo; Claudio Lucifora |
| Abstract: | In recent years many countries of the European Union (EU) have implemented comprehensive smoking bans to reduce exposure to tobacco smoke in public places and all indoor workplaces. Despite the intense public debate, research on the impact of smoking regulation on health, particularly within the workplace, is still very limited. In this paper, we use a Diff-in Diff approach and comparable micro-data -- for a large number of European countries -- to evaluate the impact of national comprehensive smoking bans on both perceived workers’ health and presence of respiratory problems within workplaces. Results show that the introduction of comprehensive smoking bans has a significant effect on workers’ perceived health, particularly on the probability of exposure to smoke and fumes, also when we control for risk exposure. When we explore differences across countries, we find that the impact is stronger in countries starting with relatively worse perceived health conditions at the workplace. |
| Keywords: | Smoking bans, workers health, Difference-in-Differences |
| JEL: | I18 J28 |
| Date: | 2009–03 |
| URL: | http://d.repec.org/n?u=RePEc:wpc:wplist:wp10_09&r=reg |
| By: | Busch, Ramona; Kick, Thomas |
| Abstract: | In the last few years it has been possible to observe decreasing interest margins for German universal banks. At the same time, institutions increasingly moved part of their business from interest to fee-earning activities. This study analyzes the determinants of non-interest income and its impact on financial performance and the risk profile of German banks between 1995 and 2007. We find empirical evidence that for all German universal banks risk-adjusted returns on equity and total assets are positively affected by higher fee income activities. Additionally, for commercial banks we show that a strong engagement in fee-generating activities goes along with higher risk. In order to analyze possible cross-subsidization effects between interest and fee business we also examine how banks' expansion in fee-based services has affected their interest margin. For savings and commercial banks we find that institutions with a strong focus on fee business charge lower interest margins when credit risk is controlled. |
| Keywords: | Income diversification,interest income,fee income,interest margin,two-stage least squares estimator |
| JEL: | G11 G21 G32 |
| Date: | 2009 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:bubdp2:200909&r=reg |