Lessons on supervisory effectiveness 

BCBS published a literature review on supervisory effectiveness providing insights from academic and policy work

Supervisory effectiveness is defined – drawing from Principles 1 and 8 of the Core Principles for effective banking supervision (BCPs) – as promoting the safety and soundness of banks and the banking system by promptly assessing prudential risks, identifying material shortcomings within banks, and using the supervisory toolkit and powers appropriately to ensure that banks remediate shortcomings in a timely manner.

About the literature review

In the aftermath of the March 2023 banking turmoil, the Basel Committee conducted work on strengthening supervisory effectiveness. In this context, I have contributed to a literature review on supervisory effectiveness that has been published as a BCBS working paper. 

The paper develops a conceptual framework about supervisory effectiveness and summarises the key findings of 212 academic and policy publications around five building blocks, namely (1) enablers and impediments to effective supervision, (2) risk identification and assessment, (3) remediation and enforcement, (4) collaboration and transparency, and (5) supervisory culture and risk management.

The paper also highlights areas where we would like to know more, such as the benefits and risks of Suptech tools, the relative contribution of the various supervisory activities, and the role of supervisory governance and culture.

Link: Lessons on supervisory effectiveness - a literature review (2025). BCBS Working Paper 45.