Empirical Research on the Effectiveness of Bank Supervision Measures

Adopting Logistic Regression, we use data from dozens of nations to estimate statistical connections between intensity of bank supervision, deposit insurance systems, admittance into market, restrictions on bank activities, bank concentration, non-performing assets, government ownership of banks and the probability of suffering banking crises. We find that the supervision measures restricting banking marketization with tight restrictions usually cause the lost of finance efficiency and the banking crisis, while those measures ensuring banks to take part in market with the identity of free competitors bring stability for banking system. We also suggest that China should improve the effectiveness of bank supervision system during the market admittance, operation and withdrawal.