Optimal Prudential Regulation of Banks and the Political Economy of Supervision
Optimal Prudential Regulation of Banks and the Political Economy of Supervision
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St. Louis: Federal Reserve Bank of St. Louis
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English
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St. Louis: Federal Reserve Bank of St. Louis
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We consider a moral hazard economy with the potential for collusion between bankers and borrowers to study how incentives for risk taking are affected by the quality of supervision. We show that low interest rates or a low return on investment may generate excessive risk taking. Because of a pecuniary externality, the market equilibrium is not opti...
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Optimal Prudential Regulation of Banks and the Political Economy of Supervision
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TN_cdi_proquest_journals_1698275566
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https://devfeature-collection.sl.nsw.gov.au/record/TN_cdi_proquest_journals_1698275566
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https://www.proquest.com/docview/1698275566?pq-origsite=primo&accountid=13902
