The regulatory and supervisory practices most effective in promoting good performance and stability in the banking sector are those that force accurate information disclosure, empower private sector monitoring of banks, and foster incentives for private agents to exert corporate control

Relationship banking, with surviving banks, has a positive value during a systemic financial crisis. For many viable small and medium-size businesses in the Republic of Korea, relationship banking reduced liquidity constraints and thus diminished the probability of unwarranted bankruptcy during...