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Risk Taking And Dynamic Prudential Regulation
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Book Synopsis Risk-Taking and Dynamic Prudential Regulation by : Caterina Lepore
Download or read book Risk-Taking and Dynamic Prudential Regulation written by Caterina Lepore and published by . This book was released on 2018 with total page 40 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper adopts a dynamic contracting framework to study the design of prudential regulation of a bank engaging in excessive risk-taking. The bank's manager can enhance short term profits by either exerting effort or taking on excessive risk, which increases the bank's exposure to tail risk. Without capital requirements, shareholders induce the manager to undertake excessive risk when the bank is undercapitalised and the regulator grants forbearance ex-post. The socially optimal regulation curbs excessive risks through a capital requirement, forcing shareholders to recapitalise the bank before entering financial distress.The capital requirement possesses bank's specific attributes, being stricter for institutions with higher exposure to systemic risk and stronger agency problems. Alternatively, temporarily dismissing the manager allows the bank to recover from financial distress avoiding excessive risk-taking.
Book Synopsis Dynamic Prudential Regulation by : Ajay Subramanian
Download or read book Dynamic Prudential Regulation written by Ajay Subramanian and published by . This book was released on 2019 with total page 62 pages. Available in PDF, EPUB and Kindle. Book excerpt: We analyze the design and impact of bank regulation using a dynamic structural framework. The optimal regulatory policy combines a target capital requirement, the mitigation of underinvestment, an intervention capital requirement to control inefficient risk-taking, and recapitalization of distressed banks. The optimal target and intervention capital requirements from our structural estimation are consistent with the substantially higher capital requirements proposed in Basel III and together achieve most of the regulatory benefits by alleviating underinvestment and asset substitution. They are interdependent and respond differently to banks' asset characteristics, thereby suggesting that regulatory policies should be carefully tuned to the economic environment.
Book Synopsis Closure Rules, Market Power and Risk-Taking in a Dynamic Model of Bank Behaviour by : Javier Suarez
Download or read book Closure Rules, Market Power and Risk-Taking in a Dynamic Model of Bank Behaviour written by Javier Suarez and published by . This book was released on 1998 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt: The value of bank charters is an important component of bankruptcy costs to bankers and may constitute an incentive for banks to adopt prudent decisions. Charter values had been considered as exogenous by previous researchers. Dynamic programming techniques allow us to obtain simultaneously the (endogenous) value of a bank and its optimal investment and financial policies. This model predicts a bang-bang risk-taking behaviour by banks which might explain the sudden appearance of solvency problems in the banking sector. Soft prudential regulation, low market power and a high risk-free interest rate may shift a bank from safe to risky. So, capital and asset regulations, and entry and closure rules are alternative ways to preserve solvency. Policy implications for the regulatory debate in the US and Europe are derived.
Book Synopsis The Foundations and Future of Financial Regulation by : Mads Andenas
Download or read book The Foundations and Future of Financial Regulation written by Mads Andenas and published by Routledge. This book was released on 2013-11-20 with total page 492 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial regulation has entered into a new era, as many foundational economic theories and policies supporting the existing infrastructure have been and are being questioned following the financial crisis. Goodhart et al’s seminal monograph "Financial Regulation: Why, How and Where Now?" (Routledge:1998) took stock of the extent of financial innovation and the maturity of the financial services industry at that time, and mapped out a new regulatory roadmap. This book offers a timely exploration of the "Why, How and Where Now" of financial regulation in the aftermath of the crisis in order to map out the future trajectory of financial regulation in an age where financial stability is being emphasised as a key regulatory objective. The book is split into four sections: the objectives and regulatory landscape of financial regulation; the regulatory regime for investor protection; the regulatory regime for financial institutional safety and soundness; and macro-prudential regulation. The discussion ranges from theoretical and policy perspectives to comprehensive and critical consideration of financial regulation in the specifics. The focus of the book is on the substantive regulation of the UK and the EU, as critical examination is made of the unravelling and the future of financial regulation with comparative insights offered where relevant especially from the US. Running throughout the book is consideration of the relationship between financial regulation, financial stability and the responsibility of various actors in governance. This book offers an important contribution to continuing reflections on the role of financial regulation, market discipline and corporate responsibility in the financial sector, and upon the roles of regulatory authorities, markets and firms in ensuring the financial health and security of all in the future.
Book Synopsis Prudential Supervision by : Frederic S. Mishkin
Download or read book Prudential Supervision written by Frederic S. Mishkin and published by University of Chicago Press. This book was released on 2009-02-15 with total page 379 pages. Available in PDF, EPUB and Kindle. Book excerpt: Since banking systems play a crucial role in maintaining the overall health of the economy, the adverse effects of poorly supervised systems may be quite severe. Without some form of vigilant external oversight, banking systems could fall prey to excessive risk taking, moral hazard, and corruption. Prudential supervision provides that oversight, using government regulation and monitoring to ensure the soundness of the banking system and, by extension, the economy at large. The contributors to this thoughtful volume examine the current state of prudential supervision, focusing on fundamental issues and key pragmatic concerns. Why is prudential supervision so important? What kinds of excess must it guard against? What particular forms does it take? Which of these are the most effective deterrents against mismanagement and system overload in today's rapidly shifting financial climate? The contributors foresee a continued movement beyond simple regulatory rules in banking and toward a more active evaluation and supervision of a bank's risk management practices.
Book Synopsis Bank Risk Taking and Prudential Regulation by : Alexandra Girod
Download or read book Bank Risk Taking and Prudential Regulation written by Alexandra Girod and published by . This book was released on 2011 with total page pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Prudential Regulation of Banks by : Mathias Dewatripont
Download or read book The Prudential Regulation of Banks written by Mathias Dewatripont and published by . This book was released on 1994-12 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt: The Prudential Regulation of Banks applies modern economic theory to prudential regulation of financial intermediaries. Dewatripont and Tirole tackle the key problem of providing the right incentives to management in banks by looking at how external intervention by claimholders (holders of equity or debt) affects managerial incentives and how that intervention might ideally be implemented. Their primary focus is the regulation of commercial banks and S&Ls, but many of the implications of their theory are also valid for other intermediaries such as insurance companies, pension funds, and securities funds. Observing that the main concern of the regulation of intermediaries is solvency (the relation between equity, debt, and asset riskiness), the authors provide institutional background and develop a case for regulation as performing the monitoring functions (screening, auditing, convenant writing, and intervention) that dispersed depositors are unable or unwilling to perform. They also illustrate the dangers of regulatory failure in a summary of the S&L crisis of the 1980s. Following a survey of banking theory, Dewatripont and Tirole develop their model of the capital structure of banks and show how optimal regulation can be achieved using capital adequacy requirements and external intervention when banks are violated. They explain how regulation can be designed to minimize risks of accounting manipulations and to insulate bank managers from macroeconomic shocks, which are beyond their control. Finally, they provide a detailed evaluation of the existing regulation and of potential alternatives, such as rating agencies, private deposit insurance, and large private depositors. They show that these reforms are, at best, a complement, rather than a substitute, to the existing regulation which combines capital ratios with external intervention in case of insolvency. The Prudential Regulation of Banks is part of the Walras Pareto Lectures, from the Universiy of Lausanne.
Book Synopsis Federal Regulator Perspectives on Financial Regulatory Reform Proposals by : United States. Congress. House. Committee on Financial Services
Download or read book Federal Regulator Perspectives on Financial Regulatory Reform Proposals written by United States. Congress. House. Committee on Financial Services and published by . This book was released on 2010 with total page 192 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Author :United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs Publisher : ISBN 13 : Total Pages :144 pages Book Rating :4.3/5 (91 download)
Book Synopsis Establishing a Framework for Systemic Risk Regulation by : United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs
Download or read book Establishing a Framework for Systemic Risk Regulation written by United States. Congress. Senate. Committee on Banking, Housing, and Urban Affairs and published by . This book was released on 2010 with total page 144 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis The Handbook of Risk Management by : Philippe Carrel
Download or read book The Handbook of Risk Management written by Philippe Carrel and published by John Wiley & Sons. This book was released on 2010-03-11 with total page 327 pages. Available in PDF, EPUB and Kindle. Book excerpt: This handbook shows a firm how to repurpose its risk management in order to design and implement a corporate culture which involves all business units and individuals at each level of the hierarchy, how to analyse its risk appetite, translate it into risk policies and risk targets and distribute responsibilities and capabilities accordingly. The book explains how to identify risk exposure across the enterprise; how to empower each business unit with risk management capabilities; how to create an information workflow for preventative decision making; how to align funding strategies and liquidity management tactics with corporate risk policies and finally, how to deal with risk management in external communications.
Book Synopsis Research Notes in Prudential Regulation by : Bance Paul
Download or read book Research Notes in Prudential Regulation written by Bance Paul and published by . This book was released on 2009 with total page 0 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Regulatory Perspectives on the Obama Administration's Financial Regulatory Reform Proposals by : United States. Congress. House. Committee on Financial Services
Download or read book Regulatory Perspectives on the Obama Administration's Financial Regulatory Reform Proposals written by United States. Congress. House. Committee on Financial Services and published by . This book was released on 2010 with total page 280 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis Dynamic Prudential Regulation by : Ilhyock Shim
Download or read book Dynamic Prudential Regulation written by Ilhyock Shim and published by . This book was released on 2006 with total page 70 pages. Available in PDF, EPUB and Kindle. Book excerpt: Prompt Corrective Action (PCA) prescribes prompt and deterministic termination of banks with insufficient levels of book-value capital. This paper investigates whether reliance on book-value capital is a good policy choice and if PCA is an optimal regulatory approach. I use a variant of DeMarzo and Fishman's (2004) dynamic model of entrepreneurial finance to model interactions between a banker and a regulator. Under hidden choice of risk, private information on returns, limited commitment by the banker and costly liquidation, I first characterize the optimal incentive-feasible allocation, and then demonstrate that the optimal allocation is implementable through the combination of a risk-based deposit insurance premium and a book-value capital regulation with prompt and stochastic termination/bailout rather than deterministic termination with no bailout as in PCA. I also show that partial termination can be used instead of stochastic termination.
Book Synopsis Financial Stability and Prudential Regulation by : Alison Lui
Download or read book Financial Stability and Prudential Regulation written by Alison Lui and published by Taylor & Francis. This book was released on 2016-10-04 with total page 232 pages. Available in PDF, EPUB and Kindle. Book excerpt: Financial stability is one of the key tenets of a central bank’s functions. Since the financial crisis of 2007-2009, an area of hot debate is the extent to which the central bank should be involved with prudential regulation. This book examines the macro and micro-prudential regulatory frameworks and systems of the United Kingdom, Australia, the United States, Canada and Germany. Drawing on the regulator frameworks of these regions, this book examines the central banks’ roles of crisis management, resolution and prudential regulation. Alison Lui compares the institutional structure of the new ‘twin-peaks’ model in the UK to the Australian model, and the multi-regulatory US model and the single regulatory Canadian model. The book also discusses the extent the central bank in these countries, as well as the ECB, are involved with financial stability, and argues that the institutional architecture and geographical closeness of the Bank of England and Financial Policy Committee give rise to the fear that the UK central bank may become another single super-regulator, which may provide the Bank of England with too much power. As a multi-regional, comparative study on the importance and effectiveness of prudential regulation, this book will be of great use and interest to students and researchers in finance and bank law, economics and banking.
Book Synopsis Essays on Dynamic Banking Regulation by : Ilhyock Shim
Download or read book Essays on Dynamic Banking Regulation written by Ilhyock Shim and published by . This book was released on 2005 with total page 244 pages. Available in PDF, EPUB and Kindle. Book excerpt:
Book Synopsis European Prudential Banking Regulation and Supervision by : Larisa Dragomir
Download or read book European Prudential Banking Regulation and Supervision written by Larisa Dragomir and published by Routledge. This book was released on 2010-04-05 with total page 445 pages. Available in PDF, EPUB and Kindle. Book excerpt: The book takes stock of new developments in legislation, case-law and institutions affecting prudential supervision. It also offers an analysis of the difficulties facing banking regulation during the current financial crises, including the issue of competition law in the banking sector.
Book Synopsis Research notes in prudential regulation by : Paul Bance
Download or read book Research notes in prudential regulation written by Paul Bance and published by . This book was released on 2006 with total page 104 pages. Available in PDF, EPUB and Kindle. Book excerpt:
