Risktaking, Limited Liability, and the Competition of Bank Regulators
نویسندگان
چکیده
منابع مشابه
Risk Taking, Limited Liability and the Competition of Bank Regulators
Limited liability and asymmetric information between an investment bank and its lenders provide an incentive for a bank to undercapitalise and finance overly risky business projects. To counter this market failure, national governments have imposed solvency constraints on banks. However, these constraints may not survive in systems competition, as systems competition is likely to suffer from th...
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T he organization of bank regulation in the United States is somewhat peculiar. Banks answer to an array of regulators, both federal and state. To begin with, a bank can choose a national or a state charter. National banks are regulated by the Office of the Comptroller of the Currency (OCC). State banks are regulated by their home states, as well as by a federal regulator. The Federal Reserve S...
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Abstract: The banking industry is one of the main sectors of the economy of any country, that its health is a necessary condition to play a positive role in the economic development of that country. The health of the banking system is assessed by the financial stability criterion, which is evaluated by various risk-taking indexes. On the other hand, the banks risk-taking is affected by various...
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Since the fiduciary duty of bank management is to maximize bank value and not social welfare, we analytically solve for the liability structure that maximizes the value of a bank leveraged by deposits and subordinated debt. Our analysis offers a perspective on privately-rational bank capital structure and its interaction with regulatory environment. Absent deposit insurance and regulatory closu...
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We develop a model of capital and liability structure of banks that optimally respond to changes of regulatory environment. The model produces the following results. In the absence of regulation, banks in our model take high leverage, both in the form of deposits and subordinated debt. We find that subordinated debt is important in banks’ liability structure—holding zero subordinated debt is ne...
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ژورنال
عنوان ژورنال: FinanzArchiv
سال: 2003
ISSN: 0015-2218
DOI: 10.1628/0015221032973582