Political Economy of Banking Regulation
The paper argues that national regulators can improve the stability of the domestic banking sector via two substitutable policy instruments; minimum capital requirements and effort spend on domestic supervision. Both tools increase the soundness of a national banking system, but they imply different cost burdens between domestic banks and taxpayers. The optimal domestic policy choice is characterised by trading off marginal costs and benefits born by each party. However, the optimal policy choice changes if banks are allowed to be mobile. We show that countries are better off by harmonising capital requirements on an international standard la Basel, since harmonisation counters a regulatory race with other jurisdictions and will increase national utility.
|Date of creation:||2012|
|Date of revision:|
|Contact details of provider:|| Web page: http://www.socialpolitik.org/|
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Donald P. Morgan, 2002. "Rating Banks: Risk and Uncertainty in an Opaque Industry," American Economic Review, American Economic Association, vol. 92(4), pages 874-888, September.
- Sinn, Hans-Werner, 1997.
"The selection principle and market failure in systems competition,"
Munich Reprints in Economics
19854, University of Munich, Department of Economics.
- Sinn, Hans-Werner, 1997. "The selection principle and market failure in systems competition," Journal of Public Economics, Elsevier, vol. 66(2), pages 247-274, November.
- Joel F. Houston & Chen Lin & Yue Ma, 2012.
"Regulatory Arbitrage and International Bank Flows,"
Journal of Finance,
American Finance Association, vol. 67(5), pages 1845-1895, October.
- Acharya, Viral V, 2002.
"Is the International Convergence of Capital Adequacy Regulation Desirable?,"
CEPR Discussion Papers
3253, C.E.P.R. Discussion Papers.
- Viral V. Acharya, 2003. "Is the International Convergence of Capital Adequacy Regulation Desirable?," Journal of Finance, American Finance Association, vol. 58(6), pages 2745-2782, December.
- George A. Akerlof, 1970. "The Market for "Lemons": Quality Uncertainty and the Market Mechanism," The Quarterly Journal of Economics, Oxford University Press, vol. 84(3), pages 488-500.
- Oscar Becerra & Eduardo Cavallo & Carlos Scartascini, 2010.
"The Politics of Financial Development - The Role of Interest Groups and Government Capabilities,"
Research Department Publications
4686, Inter-American Development Bank, Research Department.
- Becerra, O. & Cavallo, E. & Scartascini, C., 2012. "The politics of financial development: The role of interest groups and government capabilities," Journal of Banking & Finance, Elsevier, vol. 36(3), pages 626-643.
- Oscar Becerra & Eduardo A. Cavallo & Carlos Scartascini, 2010. "The Politics of Financial Development: The Role of Interest Groups and Government Capabilities," IDB Publications (Working Papers) 6873, Inter-American Development Bank.
- Holmström, Bengt & Tirole, Jean, 1994.
"Financial Intermediation, Loanable Funds and the Real Sector,"
IDEI Working Papers
40, Institut d'Économie Industrielle (IDEI), Toulouse.
- Bengt Holmstrom & Jean Tirole, 1997. "Financial Intermediation, Loanable Funds, and The Real Sector," The Quarterly Journal of Economics, Oxford University Press, vol. 112(3), pages 663-691.
- Bengt Holmstrom & Jean Tirole, 1994. "Financial Intermediation, Loanable Funds and the Real Sector," Working papers 95-1, Massachusetts Institute of Technology (MIT), Department of Economics.
- Buch, Claudia M. & DeLong, Gayle, 2008. "Do weak supervisory systems encourage bank risk-taking?," Journal of Financial Stability, Elsevier, vol. 4(1), pages 23-39, April.
- 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.
- Cerutti, Eugenio & Dell'Ariccia, Giovanni & Martinez Peria, Maria Soledad, 2007.
"How banks go abroad: Branches or subsidiaries?,"
Journal of Banking & Finance,
Elsevier, vol. 31(6), pages 1669-1692, June.
- Gyongyi Loranth & Alan Morrison, 2003. "Multinational Bank Capital Regulation with Deposit Insurance and Diversification Effects," OFRC Working Papers Series 2003fe11, Oxford Financial Research Centre.
- John S. Hughes & Steven Huddart & Markus K Brunnermeier, 1998.
"Disclosure Requirements and Stock Exchange Listing Choice in an International Context,"
FMG Discussion Papers
dp282, Financial Markets Group.
- Huddart, Steven & Hughes, John S. & Brunnermeier, Markus, 1999. "Disclosure requirements and stock exchange listing choice in an international context," Journal of Accounting and Economics, Elsevier, vol. 26(1-3), pages 237-269, January.
- Mitchener, Kris James, 2005. "Bank Supervision, Regulation, and Instability During the Great Depression," The Journal of Economic History, Cambridge University Press, vol. 65(01), pages 152-185, March.
- Dell'Ariccia, Giovanni & Marquez, Robert, 2006. "Competition among regulators and credit market integration," Journal of Financial Economics, Elsevier, vol. 79(2), pages 401-430, February.
- Donato Masciandaro, 2007. "Who pays for banking supervision? Principles and trends," Journal of Financial Regulation and Compliance, Emerald Group Publishing, vol. 15(3), pages 303-326, October.
- Barth,James R. & Caprio,Gerard & Levine,Ross, 2006.
"Rethinking Bank Regulation,"
Cambridge University Press, number 9780521855761, December.
- Alan D. Morrison & Lucy White, 2009. "Level Playing Fields in International Financial Regulation," Journal of Finance, American Finance Association, vol. 64(3), pages 1099-1142, 06.
- Colburn, Christopher B. & Hudgins, Sylvia C., 1996. "The influence on Congress by the thrift industry," Journal of Banking & Finance, Elsevier, vol. 20(3), pages 473-494, April.
- Charles M. Tiebout, 1956. "A Pure Theory of Local Expenditures," Journal of Political Economy, University of Chicago Press, vol. 64, pages 416.
When requesting a correction, please mention this item's handle: RePEc:zbw:vfsc12:62018. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (ZBW - German National Library of Economics)
If references are entirely missing, you can add them using this form.