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Bank regulation and bank crisis

Author

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  • Sigbjørn Atle Berg

    () (Norges Bank (Central Bank of Norway))

  • Øyvind Eitrheim

    () (Norges Bank (Central Bank of Norway))

Abstract

The Norwegian experiences of the past thirty years illustrate what we believe are two general tendencies in bank regulation. The first one is that a bank crisis will tend to focus regulators' minds and lead to stricter regulations. The second one is that cycles in regulation tend to interact with the economic cycle, in the sense that the rationale for strong regulation tends to become somewhat blurred when the economy is booming. These patterns appear in the Norwegian experience after the banking crisis of 1988-92, and they can presumably also be recognized in many other jurisdictions.

Suggested Citation

  • Sigbjørn Atle Berg & Øyvind Eitrheim, 2009. "Bank regulation and bank crisis," Working Paper 2009/18, Norges Bank.
    • Handle: RePEc:bno:worpap:2009_18
    as

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    File URL: http://www.norges-bank.no/en/Published/Papers/Working-Papers/2009/WP-200918/
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    References listed on IDEAS

    as
    1. Randall S. Kroszner & Philip E. Strahan, 2000. "Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms," NBER Working Papers 7582, National Bureau of Economic Research, Inc.
    2. Karsten R. Gerdrup, 2003. "Three episodes of financial fragility in Norway since the 1890s," BIS Working Papers 142, Bank for International Settlements.
    3. Bhattacharya, Sudipto & Boot, Arnoud W A & Thakor, Anjan V, 1998. "The Economics of Bank Regulation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 30(4), pages 745-770, November.
    4. Boot, Arnoud W A & Thakor, Anjan V, 1993. "Self-Interested Bank Regulation," American Economic Review, American Economic Association, vol. 83(2), pages 206-212, May.
    5. Charles Goodhart, 2008. "The Regulatory Response to the Financial Crisis," FMG Special Papers sp177, Financial Markets Group.
    6. Kane, Edward J, 1990. " Principal-Agent Problems in S&L Salvage," Journal of Finance, American Finance Association, vol. 45(3), pages 755-764, July.
    7. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    8. Randall S. Kroszner & Philip E. Strahan, 2000. "Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms," CRSP working papers 512, Center for Research in Security Prices, Graduate School of Business, University of Chicago.
    9. Randall S. Kroszner, 2000. "Obstacles to Optimal Policy: The Interplay of Politics and Economics in Shaping Bank Supervision and Regulation Reforms," University of Chicago - George G. Stigler Center for Study of Economy and State 158, Chicago - Center for Study of Economy and State.
    10. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Banking crises; history of bank regulation; capital adequacy; Basel I & II;

    JEL classification:

    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • N44 - Economic History - - Government, War, Law, International Relations, and Regulation - - - Europe: 1913-

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