Regulatory Independence & Financial Stability Insights from Global Evidence
When: Monday, October 27, 2025, 5:00 PM - 6:00 PM
Where: Online
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The London Financial Regulation Seminar is an inter-collegiate and inter-disciplinary group of experts led by CCLS and our Institute of Banking and Finance under the leadership of Professor Rosa M. Lastra and Dr. Daniele D’Alvia.
On Monday 27 October 2025, Dr. Nicolò Fraccaroli, Economist at the World Bank, will present his last paper titled “Does regulatory and supervisory independence affect financial stability?” published on the Journal of Banking and Finance (2025). Professor Rosa M. Lastra will chair the event, and Prof. Donato Masciandaro will serve as discussant.
Dr. Nicolò Fraccaroli is an Economist in the Finance, Competitiveness and Innovation Global Practice at the World Bank and a Visiting Scholar at Brown University’s Watson Institute. His research focuses on central banking, banking supervision, financial stability, and the political economy of monetary policy. He is the co-author of Inflation: A Guide for Users and Losers (Norton, 2025) and has published in leading journals on topics such as regulatory independence and financial stability. Before joining the World Bank, Nicolò taught economics at Brown University and worked at the European Central Bank, the Bank of England, and Inter-American Development Bank. He holds a Ph.D. in Economics from the University of Rome “Tor Vergata” and a MSc in Political Economy of Europe from the London School of Economics.
Prof. Donato Masciandaro is a Professor of Economics at Bocconi University in Milan, where since 2005 he holds the Chair in Economics of Financial Regulation. He has served as Head of Bocconi’s Department of Economics (2008 – 2017) and since 2018 as Director of the Baffi Centre on Economics, Finance and Regulation. In 2023, he became Director of the “Economics, Politics and Decision Sciences” area at SDA Bocconi Business School, and in 2024 he assumed the presidency of SUERF (Société Universitaire Européenne de Recherches Financières). His research focuses on monetary economics, financial regulation, central banking, and political economy of regulation.
The 2008 financial crisis triggered calls to grant banking regulators and supervisors greater independence from political bodies. Yet the benefits of such independence have remained contested. In this paper, Fraccaroli and co-authors construct a new global index of regulatory and supervisory independence (RSI) covering 98 countries between 1999 and 2019. Combining this index with bank-level data, they show that greater independence of banking regulators and supervisors is robustly associated with stronger financial stability – banks in more independent jurisdictions hold fewer non-performing loans and exhibit lower risk. The results remain consistent across alternative measures of stability and after controlling for institutional and economic factors. The analysis further explores how the impact of independence varies with supervisory architecture, showing that independence is particularly effective when supervision is entrusted to central banks.