Financial Supervision Regimes and Bank Efficiency : International Evidence

There exists a lively debate as for the appropriate architecture of the financial supervision regime, with a long list of theoretical advantages and disadvantages associated with each one of its key dimensions. The present study investigates whether and how bank profit efficiency are influenced by the central bank's involvement in financial supervision, the unification of financial authorities, and the independence of the central bank. The results show that efficiency decreases as the number of the financial sectors that are supervised by the central bank increases. Additionally, banks operating in countries with a lower number of financial supervisors are less profit efficient. Finally, central bank independence has a negative impact on bank profit efficiency