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      Examining the Development of Banking Sector Regulations and Supervision Practices across BRICS and G7 Countries

      1 , 2 , 1 , 3
      Complexity
      Hindawi Limited

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          Abstract

          The study examines the development in the banking regulatory practices across BRICS nations over the period 2000–2019. The convergence and sustainability of the regulatory framework in BRICS nations to G7 norms have also been assessed. The analysis is based on five key regulatory measures, which include activity restrictions, entry requirements for a new bank, foreign bank entry restrictions, capital stringency, and deposit insurer powers. The study constructs the regulatory indexes based on the central bank responses to the Bank Regulation and Supervision Survey (BRSS) conducted by the World Bank. To estimate the indexes, the study follows Barth, Caprio, and Levine guidelines. The result reveals that the regulators of BRICS countries impose higher restrictions on bank activities than in the G7 nations. Furthermore, the United Kingdom and Brazilian bank regulators are more liberal and imposed fewer restrictions on insurance activity only. In addition, getting a bank license is tough in both regions. Regulators allow only fit and proper applicants into the banking domain. Furthermore, the authors find that the requirements for capital are becoming more restricted in BRICS nations between 2003 and 2019 to align with Basel capital accords, relative to G7 nations. The study documents a convergence in the banking licensing requirements, and limitations on foreign bank entry and official supervisory powers in the BRICS countries with the G7 nations. The study suggests that the regulators must offer freedom to banks’ activities with increasing supervision, and it boosts the competition in the banking sector and enhances customer welfare. Furthermore, the policymakers need to redesign the deposit insurance mechanism and equip deposit insurers with more powers to enhance the safety of depositors’ interests and minimize the moral hazards in the banking sector in both regions.

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          Most cited references49

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          Bank regulation and supervision: what works best?

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            Does deposit insurance increase banking system stability? An empirical investigation

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              Do bank regulation, supervision and monitoring enhance or impede bank efficiency?

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                Author and article information

                Contributors
                Journal
                Complexity
                Complexity
                Hindawi Limited
                1099-0526
                1076-2787
                December 24 2021
                December 24 2021
                : 2021
                : 1-16
                Affiliations
                [1 ]Department of Finance and Economics, College of Administrative and Financial Sciences, Saudi Electronic University (SEU), Riyadh 23447, Saudi Arabia
                [2 ]School of Business, University of Petroleum and Energy Science (UPES), Dehradun 248007, Uttarakhand, India
                [3 ]Department of Marketing & Entrepreneurship, College of Commerce and Business Administration, Dhofar University, Salalah, Oman
                Article
                10.1155/2021/1192829
                8e3691df-f19b-4885-8c9f-dda067d968f5
                © 2021

                https://creativecommons.org/licenses/by/4.0/

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