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Should CAMELS ratings be publicly disclosed?

Author

Listed:
  • SingRu Hoe

    (Texas A&M University - Commerce)

  • Srinivas Nippani

    (Texas A&M University - Commerce)

  • John David Diltz

    (University of Texas at Arlington)

Abstract

We explore the optimal disclosure of CAMELS ratings. We employ a Stackelberg leader-follower model to obtain net social welfare from disclosure. We extend the model by incorporating dynamic stochastic optimization, resulting in an optimal stopping problem that we solve using variational inequalities. Optimal disclosure is characterized by an explicit ratio of social benefit to social cost.

Suggested Citation

  • SingRu Hoe & Srinivas Nippani & John David Diltz, 2017. "Should CAMELS ratings be publicly disclosed?," Economics Bulletin, AccessEcon, vol. 37(3), pages 1567-1572.
    • Handle: RePEc:ebl:ecbull:eb-17-00473
    as

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    File URL: http://www.accessecon.com/Pubs/EB/2017/Volume37/EB-17-V37-I3-P143.pdf
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    References listed on IDEAS

    as
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    4. Avinash K. Dixit & Robert S. Pindyck, 1994. "Investment under Uncertainty," Economics Books, Princeton University Press, edition 1, number 5474, December.
    5. Curry, Timothy J. & Fissel, Gary S. & Ramirez, Carlos D., 2008. "The impact of bank supervision on loan growth," The North American Journal of Economics and Finance, Elsevier, vol. 19(2), pages 113-134, August.
    Full references (including those not matched with items on IDEAS)

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