International Versus Domestic Auditing of Bank Solvency

International Versus Domestic Auditing of Bank Solvency
Author: Roger Dean Lagunoff
Publisher: International Monetary Fund
Total Pages: 31
Release: 2003-09-01
Genre: Business & Economics
ISBN: 1451859686

This paper examines alternative ways to prevent losses from bank insolvencies. It is widely viewed that transparency in reporting bank balance sheets is a key element in reducing such losses. It is, however, unclear just how such transparency would be achieved. Current approaches to avoiding insolvencies generally involve international enforcement mechanisms. Among these are the sovereign debt restructuring mechanism (SDRM), and, more generally, an international bankruptcy court. We develop a model that compares two alternative institutions for bank auditing. Neither of these institutions would require as much enforcement capability as an international bankruptcy court, hence they would be easier to introduce. The first of these is a system of central bank auditing of national banks. The second type of auditing is carried out by an international agency that collects risk information on banks in all countries and then provides it to depositors. Using a game-theoretic approach, we compare the informativeness of the disclosure rule in the symmetric Perfect Bayesian equilibrium in each of the two different auditing institutions. We show that the international auditor generally performs at least as well, and sometimes better than, auditing by either central banks, which, in turn, perform better than voluntary disclosure by the banks themselves. The results do not assume any informational advantages of the international auditor, nor is the international auditor somehow less "corrupt" than the central banks. Rather, the international auditor's credibility comes from the simple fact that its incentives are not distorted by a sovereignty bias that plagues the central banks.

External Audit Arrangements at Central Banks

External Audit Arrangements at Central Banks
Author: Mr.Atilla Arda
Publisher: International Monetary Fund
Total Pages: 42
Release: 2018-09-11
Genre: Business & Economics
ISBN: 1484375505

This paper takes stock of external audit arrangements at central banks. Its focus is on the annual audit of central bank financial statements, as well as legal and institutional measures that support audit quality and independence. The paper outlines good practices in these areas and provides a summary of actual practices observed based on a review of audited financial statements and central bank legislation. While the audit frameworks for central banks differ depending on their legal and institutional circumstances, central banks’ external audits increasingly follow international standards. Most of them are audited by auditors with international affiliations and embrace modern governance structures that provide for audit oversight. However, the paper also notes that a sizeable number of central banks do not publish the audit results in a timely manner, which leaves room for improvement in transparency practices.

Audits of Banks

Audits of Banks
Author: American Institute of Certified Public Accountants. Banking Committee
Publisher:
Total Pages: 220
Release: 1984
Genre: Business & Economics
ISBN:

Banking on the Principles

Banking on the Principles
Author: Mr.Thierry Tressel
Publisher: International Monetary Fund
Total Pages: 35
Release: 2006-10-01
Genre: Business & Economics
ISBN: 1451865023

This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCPs) improves bank soundness. The authors find a significant and positive relationship between bank soundness (measured with Moody's financial strength ratings) and compliance with principles related to information provision2. Specifically, countries that require banks to regularly and accurately report their financial data to regulators and market participants have sounder banks. This relationship is robust to controlling for broad indexes of institutional quality, macroeconomic variables, sovereign ratings, and reverse causality. Measuring soundness through Z-scores yields similar results. These findings emphasize the importance of transparency in making supervisory processes effective and strengthening market discipline. Countries aiming to upgrade banking regulation and supervision should consider giving priority to information provision over other elements of the core principles.

Bankingon the Principles

Bankingon the Principles
Author: Ms. Enrica Detragiache
Publisher: International Monetary Fund
Total Pages: 36
Release: 2006-10-01
Genre: Business & Economics
ISBN: 1451909551

This paper studies whether compliance with the Basel Core Principles for Effective Banking Supervision (BCPs) improves bank soundness. The authors find a significant and positive relationship between bank soundness (measured with Moody''s financial strength ratings) and compliance with principles related to information provision2. Specifically, countries that require banks to regularly and accurately report their financial data to regulators and market participants have sounder banks. This relationship is robust to controlling for broad indexes of institutional quality, macroeconomic variables, sovereign ratings, and reverse causality. Measuring soundness through Z-scores yields similar results. These findings emphasize the importance of transparency in making supervisory processes effective and strengthening market discipline. Countries aiming to upgrade banking regulation and supervision should consider giving priority to information provision over other elements of the core principles.

International Banking Regulation:Law, Policy and Practice

International Banking Regulation:Law, Policy and Practice
Author: George Walker
Publisher: Kluwer Law International B.V.
Total Pages: 654
Release: 2001-12-06
Genre: Law
ISBN: 904119794X

This work offers a comprehensive examination of the development and structure of the provisions for the control of international financial markets. It explores the background to the major financial crises of the late 20th-century and the nature of the global response.

IMF Survey

IMF Survey
Author: International Monetary Fund
Publisher:
Total Pages: 432
Release: 2003
Genre: International finance
ISBN: