Analysis of Data Processing for Monitoring Economic and Financial Performance of Banks in Supervisory Institutions: Overview of Selected Legal Regulations

Abstract

Financial system safety network in Poland currently includes four independent supervisory institu- tions operating within central government administration structures. On top of specific tasks assigned to these supervisory bodies, they are seeking to ensure protection against negative impact of difficulties experienced by a single entity or a group thereof in the financial market on the financial sector. Super- vising institutions are expected to, inter alia, monitor economic and financial performance of individual entities, analyse and predict effects of their activities, as well as follow macroeconomic developments and adopt pre-emptive measures to prevent negative trends in the sector. The paper intends to discuss research and analytical practices of selected supervisory institutions in the banking and finance sector to further compare them and assess consequences of individual approaches.

All of these supervisory institutions deliver tasks connected with analysing data reported to them and making predictions. By giving positive consideration to systemic solutions in these areas, based on which all supervisory institutions would be using data analyses and conclusions resulting from them that would originate from a single analytical centre, we could diminish the likelihood of receiving con- tradictory assessments of the situation from different bodies and the risk of applying inadequate super- visory tools. In addition, the move would improve analytical efficiency at the macro level, and reduce resources engaged in analytical processes. Uniform approach of supervisory institutions to the assess- ment of economic performance of banks would allow to unambiguously delineate the scope of super- visors' accountability for individual stages of the supervisory process: data acquisition, processing, and analysis; monitoring banks and their performance, cyclic exchange of the results of studies and deci- sion making depending on the place of supervisory institutions in the system and their tasks in bank recovery plans, which would reduce the number of mistakes or differences in the interpretation of re- sults in administrative decision-making.

The analysis focuses on the identification of the goal of data processing in individual supervisory insti- tutions and comparing these goals. The aim is to look at the process, scope and sources of acquisition of economic and financial data from banks for supervision-related purposes that are further analysed by individual institutions within the financial system safety network and results of conducted exami- nations, as well as how they are used by the supervisory bodies.

To carry out the analysis we used the existing models deployed to assess financial and economic per­formance of banks by supervisory bodies and based on balance sheets and financial statements of banks but also on questionnaires and bank documents. Research methodology consisted in making quantitative and qualitative comparisons of the scope of data used in supervisory analyses and the goal of data processing.