Measuring the Quality of Bank Regulation and Supervision with an Application to Transition Economies

This study develops a methodology to evaluate the quality of the legal aspect of bank regulation and supervision (RS). We use both the Basle guidelines and the letter of banking laws to form an extensive set of criteria to evaluate banking laws. As an application, we provide measures of RS for 23 transition economies. Our measurements indicate that legal banking reforms in Poland, Hungary, and Estonia have been more ambitious than the rest of the countries in transition. Controlling for various other relevant factors, empirical evidence reveals a significant positive relationship between RS and real GDP growth in transition economies.     

Factors effecting the model performance measures area under the ROC curve,net reclassification improvement and integrated discrimination improvement

ABSTRACT

The aim of this study is to investigate the impact of correlation structure, prevalence and effect size on the risk prediction model by using the change in the area under the receiver operating characteristic curve (ΔAUC), net reclassification improvement (NRI), and integrated discrimination improvement (IDI). In simulation study, the dataset is generated under different correlation structures, prevalences and effect sizes. We verify the simulation results with the real-data application. In conclusion, the correlation structure between the variables should be taken into account while composing a multivariable model. Negative correlation structure between independent variables is more beneficial while constructing a model.