# **TABLE 3: CHANGES IN REGULATION AND SUPERVISION ACROSS COUNTRIES DURING 2007-2011**

This table shows responses to questions for which we found statistically significant differences between the 2007 and 2011 surveys. Following Laeven and Valencia (2010), the “crisis” countries between 2007 and 2009 include United States, United Kingdom, Iceland, Ireland, Latvia, Belgium, Luxembourg, Netherlands, Austria, Denmark, Germany, Kazakhstan, and Ukraine (cases of systemic banking crises); France, Greece, Hungary, Portugal, Russia, Slovenia, Spain, Switzerland (borderline cases). Student’s t-test are used to test for the equality of the means between responses to the 2007 and 2011 surveys.

|**Section**|**Question**||**All**|**Crisis**|**Non-Crisis**|
|---|---|---|---|---|---|
|**Capital regime**<br>**and actual capital**<br>**levels**|What was the actual risk based capital ratio of<br>the banking system? (Average %)|2007<br>2011<br>p-value|15.45<br>17.45<br>0.003|12<br>14<br>0.126|16<br>18<br>0.012|
||What was the actual Tier 1 capital ratio of the<br>banking system?<br>(Average %)|2007<br>2011<br>|13.38<br>15.93<br>|10<br>12<br>|15<br>17<br>|
|||p-value|0.013|0.101|0.037|
|**Governance**|Is there a regulatory limit on related party<br>exposures? (% Yes)|2007<br>2011|87<br>96|100<br>77|85<br>100|
|||p-value|0.024|0.082|0.00|
||What are the conditions under which banks can|2007|1.98|1.5|2.1|
|**Restrictions on**<br>**activities**|engage in securities activities? (Index takes<br>values from 1 to 4 where higher values denote<br>stronger restrictions.)|2011<br>p-value|1.73<br>0.0134|1.2<br>0.0563|1.8<br>0.0374|
||What are the conditions under which banks can<br>engage in insurance activities? (Index takes<br>values from 1 to 4 where higher values denote<br>stronger restrictions.)|2007<br>2011<br>p-value|3.07<br>2.48<br>0.000|2.8<br>2.2<br>0.0235|3.1<br>2.5<br>0.000|
||What are the conditions under which banks can<br>engage in real estate activities? (Index takes<br>values from 1 to 4 where higher values denote<br>stronger restrictions.)|2007<br>2011<br>p-value|3.12<br>2.83<br>0.008|2.4<br>2.2<br>0.204|3.3<br>3<br>0.019|
|**Asset diversification**|Are there any regulatory rules or supervisory<br>guidelines regarding asset diversification? (%<br>Yes)|2007<br>2011<br>p-value|46<br>59<br>0.025|43<br>52<br>0.493|46<br>60<br>0.032|
||Are banks prohibited from making loans<br>abroad? (% Yes)|2007<br>2011|9<br>18|10<br>0|9<br>22|
|||p-value|0.018|0.162|0.002|
|**Deposit insurance**|Is there an explicit deposit insurance protection<br>system for commercial banks? (% Yes)|2007<br>2011|66<br>77|100<br>100|58<br>71|
|||p-value|0.000|.|0.000|
||Does the deposit insurance scheme also cover<br>foreign currency deposits? (% Yes)|2007<br>2011|81<br>16|90<br>20|78<br>14|
|||p-value|0.000|0.000|0.000|
||Does the deposit insurance scheme also cover<br>interbank deposits? (% Yes)|2007<br>2011|9<br>86|0<br>95|12<br>82|
|||p-value|0.000|0.000|0.000|
||Were any deposits not explicitly covered by the<br>deposit insurance scheme at the time of failure<br>compensated the last time a bank failed<br>(excluding funds later paid out in liquidation<br>procedures)?(% Yes)|2007<br>2011<br>p-value|38<br>21<br>0.031|12<br>12<br>.|53<br>27<br>0.018|

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