Measure It, Improve It
Bank Regulation and Supervision in 180 Countries 1999 - 2011James R. Barth, Gerard Caprio, Jr., and Ross Levine
April 24, 2013
Seldom have there been more reasons than now to investigate and compare bank regulation around the world. One can point to the global banking crisis of 2007-2009, the banking problems that still plague many European countries in 2013, and the more than 100 systemic banking crises that have devastated economies around the world since 1970. All these crises reflect, at least in part, defects in bank regulation and supervision.
The problem is that measuring bank regulation and supervision around the world is hard. Hundreds of laws and regulations, emanating from different national and local governments, define the rules for what banks are allowed to do and how they can do it. This immense quantity and diversity of laws and rules poses a daunting challenge for any effort to compile comprehensive data or to aggregate it into meaningful comparisons of very different regulatory regimes. As a result, the systematic collection of data on bank regulatory and supervisory policies is only in its nascent stages. Yet without sound measures of banking policies across countries and over time, researchers will be hard-pressed to assess which approaches work best or to propose useful reforms.
In response, this paper offers a new database for more than 180 countries, covering the period from 1999 through 2011. We seek to contribute to research on the design and implementation of policies by providing useful measures of the systems now in place. As the great 19th-century scientist Lord Kelvin reportedly argued, "If you cannot measure it, you cannot improve it."
Our database builds on surveys sponsored by the World Bank that were released in 1999, 2003, 2007, and 2012. Overall, the surveys cover 180 countries. The dataset also provides information on the organization of regulatory agencies and the size and structure of the overall banking system. Besides describing the data, this paper provides a wealth of cross-country and cross-time comparisons.