TY - JOUR AU - Beck,Thorsten AU - Demirguc-Kunt,Asli AU - Levine,Ross TI - Bank Supervision and Corruption in Lending JF - National Bureau of Economic Research Working Paper Series VL - No. 11498 PY - 2005 Y2 - August 2005 UR - http://www.nber.org/papers/w11498 L1 - http://www.nber.org/papers/w11498.pdf N1 - Author contact info: Thorsten Beck The World Bank 1818 H Street N.W. Mail Stop MC 3-307 Washington, D.C. 20433 E-Mail: tbeck@worldbank.org Asli Demirguc-Kunt World Bank 1818 H Street Washington, DC 20433 E-Mail: ademirguckunt@worldbank.org Ross Levine Department of Economics Brown University 64 Waterman Street Providence, RI 02912 Tel: 401/863-2170 E-Mail: ross_levine@brown.edu M2 - featured in NBER digest on 2005-08-01 AB - Which commercial bank supervisory policies ease - or intensify - the degree to which bank corruption is an obstacle to firms raising external finance? Based on new data from more than 2,500 firms across 37 countries, this paper provides the first empirical assessment of the impact of different bank supervisory policies on firms%u2019 financing obstacles. We find that the traditional approach to bank supervision, which involves empowering official supervisory agencies to directly monitor, discipline, and influence banks, does not improve the integrity of bank lending. Rather, we find that a supervisory strategy that focuses on empowering private monitoring of banks by forcing banks to disclose accurate information to the private sector tends to lower the degree to which corruption of bank officials is an obstacle to firms raising external finance. In extensions, we find that regulations that empower private monitoring exert a particularly beneficial effect on the integrity of bank lending in countries with sound legal institutions. ER -