Banking regulation, central bank governor credentials and earnings quality of banks in East Africa

What is it about?

Using an index to measure the strength of banking regulatory environment and another index to measure the individual credentials of central bank governors of countries in a developing region, we establish that a higher regulatory oversight score is associated with improved quality of bank earnings. We, however, do not find a significant influence of central bank governor credentials on the quality of bank earnings. Overall, our results are in favour of a consistent stricter regulatory supervision and monitoring for banks within the East African region.

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