Measuring the Quality of Banking Regulation in Egypt

The free market economy most countries pursue nowadays is never entirely free from government intervention. Policy makers devote special attention to the regulation of financial markets and with the current financial crisis, the quality of the banking regulations need to be reconsidered. This paper aims to provide a tool to measure the quality of banking regulation and supervision. This is usually a difficult task because it is a qualitative analysis and is arbitrary. However, a regulation index has been modelled that is similar to the concept of a cost-benefit analysis. The input index resembles the cost signifying the efforts made by governments and supervisors to measure the intensity of the regulation. The output index resembles the benefit which shows the outcome of the governments’ efforts. Finally, applying this index on Egypt filled a research gap in this area.