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Allocating bank regulatory powers: lender of last resort, deposit insurance, and supervision

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  • Charles M. Kahn
  • João A.C. Santos

Abstract

Bank regulation in most countries encompasses a lender of last resort, deposit insurance and supervision. These functions are interrelated and therefore require coordination among the authorities responsible for them. These authorities, however, are often established with different mandates, some of which are likely to be in conflict. We consider these issues by studying the optimal institutional allocation of such functions.

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Bibliographic Info

Paper provided by Federal Reserve Bank of Chicago in its series Proceedings with number 717.

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Length: 648-666
Date of creation: 2001
Date of revision:
Publication status: Published in Conference on Bank Structure and Competition (2001 : 37th) ; The financial net: costs, benefits, and implications for regulation
Handle: RePEc:fip:fedhpr:717

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Related research

Keywords: Lenders of last resort ; Deposit insurance ; Bank supervision ; Bank liquidity;

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References

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  1. Christopher Sleet & Bruce D. Smith, 2000. "Deposit insurance and lender-of-last-resort functions," Proceedings, Federal Reserve Bank of Cleveland, pages 518-579.
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  18. Marvin Goodfriend & Jeffrey M. Lacker, 1999. "Limited commitment and central bank lending," Working Paper 99-02, Federal Reserve Bank of Richmond.
  19. Xavier Vives, 2001. "Restructuring Financial Regulation in the European Monetary Union," Journal of Financial Services Research, Springer, vol. 19(1), pages 57-82, February.
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  22. Xavier Freixas, 1999. "Optimal bail out policy, conditionality and constructive ambiguity," Economics Working Papers 400, Department of Economics and Business, Universitat Pompeu Fabra.
  23. Sally M. Davies & Douglas A. McManus, 1991. "The effects of closure policies on bank risk-taking," Finance and Economics Discussion Series 158, Board of Governors of the Federal Reserve System (U.S.).
  24. Mathias Dewatripont & Jean Tirole, 1994. "The prudential regulation of banks," ULB Institutional Repository 2013/9539, ULB -- Universite Libre de Bruxelles.
  25. George J. Mailath & Loretta J. Mester, 1993. "A positive analysis of bank closure," Working Papers 93-10/R, Federal Reserve Bank of Philadelphia.
  26. Birchler, Urs W, 2000. "Bankruptcy Priority for Bank Deposits: A Contract Theoretic Explanation," Review of Financial Studies, Society for Financial Studies, vol. 13(3), pages 813-40.
  27. Davies, Sally M. & McManus, Douglas A., 1991. "The effects of closure policies on bank risk-taking," Journal of Banking & Finance, Elsevier, vol. 15(4-5), pages 917-938, September.
  28. Dirk Schoenmaker, 1992. "Institutional Separation between Supervisory and Monetary Agencies," FMG Special Papers sp52, Financial Markets Group.
  29. Calomiris, Charles W & Kahn, Charles M, 1991. "The Role of Demandable Debt in Structuring Optimal Banking Arrangements," American Economic Review, American Economic Association, vol. 81(3), pages 497-513, June.
  30. Allen, Linda & Saunders, Anthony, 1993. "Forbearance and valuation of deposit insurance as a callable put," Journal of Banking & Finance, Elsevier, vol. 17(4), pages 629-643, June.
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  1. Preventing bank runs – a primer
    by ? in Bruegel blog on 2013-04-02 10:58:20
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