Classification of models of regulation and supervision by the activities of financial institutions

Sergiy Khoruzhyi


Introduction. In the conditions of globalized world, a mechanism for coordination of national systems of regulation and supervision of financial institutions is considered an urgent need.
The problems of the formation of regulatory and supervisory systems in the financial sector are the core ones for many scholars' researches (such as B.Eihengrin, D. Kalvo, G. Karcheva, A.Melecki, V.Mishchenko, etc.). Scientists have conducted many relevant and effective studies of the evolution of institutional support for such systems. However, these studies differ in their approaches to the determination of the models of the regulatory and supervisory systems.

Purpose. The article aims to conduct the analysis of the positive practice of developing regulatory and supervisory systems to control financial institutions activity and to identify the main factors for the classification of models of such systems.

Results. Author establishes the objective reasons for the emergence of a sectoral model, such as different nature of financial services, which establish the legal relationship between financial institution and consumer of financial services. The article defines the differences between consolidated and integrated models. These differences outline the responsibility for oversight by one or more supervisors and display the existence of different supervisory methodologies - unified and integrated. Author determines the main advantages provided by the system of consolidated supervision and estimates the shortcomings of the transitional period in the process of transforming of the sectoral model into a consolidated regulatory and supervisory model. According to the proposed criteria (supervision of financial institutions, protection of consumers of financial services and investors, micro-prudential and macroprudential supervision, withdrawal of financial institutions from the market), author determines four models of the system of regulation and supervision of financial institutions. They are sectoral model, consolidated model with centralization and consolidation of the functions in the central bank, a consolidated model with centralization and consolidation of functions in a single authorized oversight body and an integrated model Twin Peaks. Investigation of the transformation processes of the regulation and supervision systems over the activities of financial institutions allowed generalizing the advantages and disadvantages of different models of regulatory and supervisory systems, which have been outlined in this paper.


regulation; supervision; financial institutions; consolidation of regulation and supervision; models of regulation and supervision; micro-prudential supervision; macro-prudential supervision

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Science Works Journal "Ekonomichnyy analiz"

ISSN 1993-0259 (Print)  ISSN 2219-4649 (Online) DOI: 10.35774/econa

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