Measuring the Quality of Bank Regulation and Supervision and its Macroeconomic Effects - an Application to Transition Economies

This study provides a method to evaluate the quality of legal frameworks for bank regulation and supervision (RS) by developing a comprehensive set of criteria. Using this method, it also generates an original data set for transition economies that allows for an empirical analysis of the relationship between RS and macroeconomic performance. The study presents evidence of a significant negative relationship between RS and inflation and a significant positive relationship between RS and the real GDP growth. The evidence also suggest that past episodes of financial crises, prevailing degree of market liberalization, and the rule of law all have significant positive effects on the quality of RS