Improving Banking Supervisory Mechanisms
In the OIC Member Countries
59
Figure 39: Supervisory Authorities' Responsibilities
Source: World Bank, Bank Regulation and Supervision Survey
4.2.8 Concluding Remarks
 OIC countries have strong capital regulation regimes in a comparison to EU-27 and US.
This observation holds for all OIC countries in different income categories. Capital
regulations exhibit an increasing trend suggesting that all OIC countries move to even
stronger capital regulation regimes in the aftermath of the 2008 crisis. OIC countries
should be able to make a smooth transition to the new Basel III requirements, however
this will be relatively easy for OIC banks with strong common equity component in the
capital structure of banks.
 Banks engaging in activities outside of banking and ownership structure of banks are
critical aspects of regulation. Banking sector in OIC countries impose relatively stronger
regulations in a comparison to EU-27 and US, hence already achieved the level of
international benchmarks according to this criteria.
 The power of the supervision authority which is measured composing important aspects
of regulatory effectiveness, is in line with EU-27 and US, however there is a slight decline
after the 2008 crisis. OIC countries should preserve their strong supervision practices,
and recently, especially in the transition period towards Basel III, they are refining
banking supervision. Malaysia and Turkey are good examples in this regard.
 Most OIC countries have autonomous supervision authorities, where a single authority is
responsible for the banking system regulation which eliminates possible conflict of
interests.
 External auditing and in a broader sense external governance in OIC countries are well
established and in line with our international benchmarks EU-27 and US. Furthermore,
private monitoring performs well in most OIC countries.
0%
10%
20%
30%
40%
50%
60%
70%
Is the body/agency in charge of supervising banks also responsible for the
supervision of the following financial sectors? (Percentage of Yes)
Insurance Securities Pension funds