Liberalization, moral hazard in banking, and prudential regulation: Are capital requirements enough?

被引:861
作者
Hellmann, TF [1 ]
Murdock, KC
Stiglitz, JE
机构
[1] Stanford Univ, Grad Sch Business, Stanford, CA 94305 USA
[2] McKinsey & Co Inc, Chicago, IL 60603 USA
[3] World Bank, Washington, DC 20433 USA
关键词
D O I
10.1257/aer.90.1.147
中图分类号
F [经济];
学科分类号
02 ;
摘要
In a dynamic model of moral hazard, competition can undermine prudent bank behavior. While capital-requirement regulation can induce prudent behavior, the policy yields Pareto-inefficient outcomes. Capital requirements reduce gambling incentives by putting bank equity at risk. However, they also have a perverse effect of harming banks' franchise values, thus encouraging gambling. Pareto-efficient outcomes can be achieved by adding deposit-rate controls as a regulatory instrument, since they facilitate prudent investment by increasing franchise values. Even if deposit-rate ceilings are not binding on the equilibrium path, they may be useful in deterring gambling off the equilibrium path. (JEL G2, E4, L5).
引用
收藏
页码:147 / 165
页数:19
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