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Do banks need a supervisor?

Author

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  • Osadchiy, Maksim
  • Sidorov, Alexander

Abstract

The paper studies a simple microeconomic stochastic model of a bank operating in a competitive environment. The model allows us to describe the conditions on the model parameters that generate both the formation of bubbles in the credit market and the formation of stable banks with self-restrictive behavior, that do not require the intervention of the regulator. The comparative statics of equilibria is studied with respect to the basic parameters of the model, a theoretical assessment is carried out of the probability of bank default based on the values of exogenous factors in both the short and long term.

Suggested Citation

  • Osadchiy, Maksim & Sidorov, Alexander, 2019. "Do banks need a supervisor?," MPRA Paper 95290, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:95290
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    File URL: https://mpra.ub.uni-muenchen.de/95919/1/MPRA_paper_95290.pdf
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    File URL: https://mpra.ub.uni-muenchen.de/96825/8/MPRA_paper_96825.pdf
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    References listed on IDEAS

    as
    1. Carmen M. Reinhart & Kenneth S. Rogoff, 2014. "This Time is Different: A Panoramic View of Eight Centuries of Financial Crises," Annals of Economics and Finance, Society for AEF, vol. 15(2), pages 215-268, November.
    2. Reinhart, Carmen & Rogoff, Kenneth, 2009. "This Time It’s Different: Eight Centuries of Financial Folly-Preface," MPRA Paper 17451, University Library of Munich, Germany.
    3. Carmen M. Reinhart & Kenneth S. Rogoff, 2009. "Varieties of Crises and Their Dates," Introductory Chapters, in: This Time Is Different: Eight Centuries of Financial Folly, Princeton University Press.
    4. Reinhart, Carmen & Rogoff, Kenneth, 2009. "This Time It’s Different: Eight Centuries of Financial Folly-Chapter 1," MPRA Paper 17452, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Banking microeconomics; Credit bubble; Probability of default; Capital adequacy ratio;
    All these keywords.

    JEL classification:

    • 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
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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