IDEAS home Printed from https://ideas.repec.org/p/sbs/wpsefe/2000fe07.html
   My bibliography  Save this paper

Regulator Reputation and Optimal Banking Competition Policy

Author

Listed:
  • Alan D. Morrison

Abstract

We consider an economy in which banks increase social welfare by monitoring but where the verifiable part of banking income is stochastic. Banks abstract non-verifiable returns and this can render banking contracts unattractive to investors. The survival of the banking sector is ensured by a regulator who determines the rent, or charter value, which accrues to the holder of a banking license and who sets deposit insurance levels. High charter values encourage bankers to reduce the opacity of their activities and deposit insurance mitigates the effects upon depositors of perquisit consumption. We show that there is a tradeoff between increased charter value and reduced deposit insurance. Moreover, optimal competition levels are a decreasing function of regulator reputation.

Suggested Citation

  • Alan D. Morrison, 2000. "Regulator Reputation and Optimal Banking Competition Policy," OFRC Working Papers Series 2000fe07, Oxford Financial Research Centre.
    • Handle: RePEc:sbs:wpsefe:2000fe07
    as

    Download full text from publisher

    File URL: http://www.finance.ox.ac.uk/file_links/finecon_papers/2000fe07.pdf
    Download Restriction: no
    ---><---

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:sbs:wpsefe:2000fe07. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Maxine Collett (email available below). General contact details of provider: https://edirc.repec.org/data/frcoxuk.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.