The regulator's trade-off: Bank supervision vs. minimum capital

Florian Buck, Eva Schliephake*

*Autor correspondente para este trabalho

Resultado de pesquisarevisão de pares

14 Citações (Scopus)

Resumo

We develop a simple model of banking regulation with two policy instruments: minimum capital requirements and the supervision of domestic banks. The regulator faces a trade-off: high capital requirements cause a drop in the banks' profitability, whereas strict supervision reduces the scope of intermediation and is costly for taxpayers. We show that a mix of both instruments minimises the costs of preventing the collapse of financial intermediation. Once we allow for cross-border banking, the optimal policy is not feasible. If domestic supervisory effort is not observable, our model predicts a race to the bottom in capital requirement regulation. Therefore, countries are better off by harmonising regulation on an international standard.
Idioma originalEnglish
Páginas (de-até)4584-4598
Número de páginas15
RevistaJournal of Banking and Finance
Volume37
Número de emissão11
DOIs
Estado da publicaçãoPublicado - nov 2013
Publicado externamenteSim

Impressão digital

Mergulhe nos tópicos de investigação de “The regulator's trade-off: Bank supervision vs. minimum capital“. Em conjunto formam uma impressão digital única.

Citação