What is it about?
Hungary moved bank supervision to the central bank in 2013 and, around the same time, merged the savings co-operative sector. This paper tests how these two shifts changed bank profitability between 2003 and 2019. Using bank-level data, it finds stricter supervision lowered profits, while consolidation reduced competition and partly lifted profits for the remaining institutions.
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Why is it important?
After the global financial crisis, many countries debated whether central banks should also supervise banks. This study is timely because it uses a long before–after window (2003–2019) and separates two big forces: the 2013 supervisory merger and the co-operative integration that reshaped competition. The results clarify a real trade-off: stronger oversight can compress profitability, while market consolidation can offset that by weakening competition.
Perspectives
What I find most interesting is the “two-way” story: profitability is not driven by supervision alone, but also by how market structure changes in parallel. Looking at the same period through a dynamic panel lens makes the institutional shift more credible than a simple before/after comparison. It also highlights why policy evaluation should track both stability goals and competition effects—otherwise we may misread the winners and losers of reform.
Tibor Bareith
ELTE Centre for Economic and Regional Studies Hungary
Read the Original
This page is a summary of: The Impact of Changes in Financial Supervision on the Profitability of the Hungarian Banking Sector, Economies, July 2022, MDPI AG,
DOI: 10.3390/economies10070176.
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