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Incentive Conflict in Central Bank Responses to Sectoral Turmoil in Financial Hub Countries

In: Globalization And Systemic Risk

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  • Edward J. Kane

    (Boston College, USA)

Abstract

The following sections are included:Understanding National Safety Nets and How Weakly They are LinkedComponents of national netsTissue connecting national nets in open economiesIncentive Conflicts Built into National Regulatory CulturesDimensions of regulatory cultureImportance of transparency and deterrencyWhat if monitoring and policing costs were zero?Global and National Incentive Conflicts in Safety Net ManagementWhat countries manage the global safety net?Differences in hub-country culturesRepurchase agreement as particularly opaque last resort loansHow repurchase agreements substitute for discount-window loansWhere Implicit Subsidies Originate: The Political Economy of Last Resort LendingPolicy ImplicationsSummary ImplicationsReferences

Suggested Citation

  • Edward J. Kane, 2009. "Incentive Conflict in Central Bank Responses to Sectoral Turmoil in Financial Hub Countries," World Scientific Book Chapters, in: Douglas D Evanoff & David S Hoelscher & George G Kaufman (ed.), Globalization And Systemic Risk, chapter 9, pages 121-144, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789812833389_0009
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    References listed on IDEAS

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    1. Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998. "Law and Finance," Journal of Political Economy, University of Chicago Press, vol. 106(6), pages 1113-1155, December.
    2. Douglas W. Diamond, 1984. "Financial Intermediation and Delegated Monitoring," Review of Economic Studies, Oxford University Press, vol. 51(3), pages 393-414.
    3. Marvin Goodfriend, 2001. "Why we need an \\"accord\\" for Federal Reserve credit policy : a note," Economic Quarterly, Federal Reserve Bank of Richmond, issue Win, pages 23-32.
    4. Robert A. Eisenbeis & George G. Kaufman, 2005. "Bank crisis resolution and foreign-owned banks," Economic Review, Federal Reserve Bank of Atlanta, vol. 90(Q4), pages 1-18.
    5. Jensen, Michael C. & Meckling, William H., 1976. "Theory of the firm: Managerial behavior, agency costs and ownership structure," Journal of Financial Economics, Elsevier, vol. 3(4), pages 305-360, October.
    6. William Dudley, 2008. "May you live in interesting times: the sequel," Proceedings 1071, Federal Reserve Bank of Chicago.
    7. Goodfriend, Marvin, 1994. "Why We Need an "Accord" for Federal Reserve Credit Policy: A Note," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(3), pages 572-580, August.
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    Cited by:

    1. Philip Strahan, 2008. "Liquidity Production in 21st Century Banking," NBER Working Papers 13798, National Bureau of Economic Research, Inc.

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    More about this item

    Keywords

    Globalization; Banking; Financial Markets; Systemic Risk; Financial Crisis; Contagion;
    All these keywords.

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F33 - International Economics - - International Finance - - - International Monetary Arrangements and Institutions
    • 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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