Can I read State-contingent Bank Regulation with Unobserved Actions and Unobserved Characteristics on EtoBox?

State-contingent Bank Regulation with Unobserved Actions and Unobserved Characteristics by David A. Marshall; Edward Simpson Prescott is a Economics, Econometrics and Finance article available to read on EtoBox.

What is State-contingent Bank Regulation with Unobserved Actions and Unobserved Characteristics about?

Optimal bank regulation is studied in a model where bank quality is private information and bank portfolio choice is subject to moral hazard. Regulators wish to control bank risk solely because high risk adversely affects a bank incentives to improve its mean return. Numerical methods are developed to study the model. Capital regulation alone has a limited ability to separate types. Including ex post fines achieve separation at lower cost, resulting in improved welfare. Low-quality banks are fined on high returns in order to control risk-taking. High-quality banks face fines on lower returns mainly to ensure truth-telling by low-quality banks. High-quality banks bear the full cost of regulation.

Who reads State-contingent Bank Regulation with Unobserved Actions and Unobserved Characteristics?

Author

David A. Marshall; Edward Simpson Prescott

Publisher

Elsevier Science; Elsevier ; Elsevier BV (ISSN 0165-1889)

Published

2006

Language

EN

Field

Economics, Econometrics and Finance (Social Sciences)