The Library
Prudent banks and creative mimics : can we tell the difference?
Tools
Powell, Andrew, Maier, Antonia and Miller, Marcus (2012) Prudent banks and creative mimics : can we tell the difference? Working Paper. Coventry, UK: Department of Economics, University of Warwick. CAGE Online Working Paper Series, Volume 2012 (Number 76).
|
Text (Working paper)
WRAP_76.2012_miller.pdf - Published Version Download (1235Kb) | Preview |
Official URL: http://www2.warwick.ac.uk/fac/soc/economics/resear...
Abstract
The recent financial crisis has forced a rethink of banking
regulation and supervision and the role of financial innovation.
We develop a model where prudent banks may signal their type
through high capital ratios. Capital regulation may ensure separation
in equilibrium but deposit insurance will tend to increase
the level of capital required. If supervision detects risky behaviour
ex ante then it is complementary to capital regulation.
However, financial innovation may erode supervisors' ability to
detect risk and capital levels should then be higher. But regulators
may not be aware their capacities have been undermined.
We argue for a four-prong policy response with higher bank capital
ratios, enhanced supervision, limits to the use of complex
financial instruments and Coco's. Our results may support the
institutional arrangements proposed recently in the UK.
Item Type: | Working or Discussion Paper (Working Paper) | ||||
---|---|---|---|---|---|
Subjects: | H Social Sciences > HB Economic Theory | ||||
Divisions: | Faculty of Social Sciences > Economics | ||||
Library of Congress Subject Headings (LCSH): | Financial crises, Global Financial Crisis, 2008-2009, Banks and banking | ||||
Series Name: | CAGE Online Working Paper Series | ||||
Publisher: | Department of Economics, University of Warwick | ||||
Place of Publication: | Coventry, UK | ||||
Official Date: | February 2012 | ||||
Dates: |
|
||||
Volume: | Volume 2012 | ||||
Number: | Number 76 | ||||
Number of Pages: | 22 | ||||
Institution: | University of Warwick | ||||
Status: | Not Peer Reviewed | ||||
Publication Status: | Published | ||||
Access rights to Published version: | Open Access (Creative Commons) | ||||
Date of first compliant deposit: | 1 August 2016 | ||||
Date of first compliant Open Access: | 1 August 2016 | ||||
Funder: | Economic and Social Research Council (Great Britain) (ESRC) |
Request changes or add full text files to a record
Repository staff actions (login required)
View Item |
Downloads
Downloads per month over past year