Bank Capital Regulation With Random Audits
AbstractWe consider a model of optimal bank closure rules (cum capital replenishment by banks), with Poisson-distributed audits of the banks asset value by the regulator, with the goal of eliminating (ameliorating) the incentives of levered bank shareholder/mangers to take excessive risks in their choice of underlying assets. The roles of (tax or other) subsidies on deposit interest payments by the ban, and of the auditing frequency are examined
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Bibliographic InfoPaper provided by Financial Markets Group in its series FMG Discussion Papers with number dp354.
Date of creation: Aug 2000
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Other versions of this item:
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
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