Regulatory Arbitrage, Supervisory Capacities and Information Sharing in the Wake of Cross-Border Banking Supervision

Abstract

The debate on banking supervision is an agenda of utmost importance to the entrepreneurs, banks, researchers and policy markers. This is for obvious reasons that better banking regulations translates to reduced trade barriers, easy access to capital, reduced risk and contributes to economic benefits for all. I study how stringent laws influence arbitrage in cross border banking and how adequate supervisory cooperation in information sharing and supervision capacities can translate to better regulations for cross border activities. I propose a model that focuses on the regulatory effects of stringent laws and adequate cooperation on cross border banking, and their role in effective bank supervision.

Keywords: Banking Supervision, Regulations, Cross-Border Banking, Arbitrage, supervisory capacities.