Regulatory Capture in Banking
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Summary:
Banks will want to influence the bank regulator to favor their interests, and they typically have the means to do so. It is shown that such "regulatory capture" in banking does not imply ineffectual regulation; a "captured" regulator may impose very tight, costly prudential requirements to reduce negative spillovers of risk-taking by weaker banks. In these circumstances, differences in the regulatory regime across jurisdictions may persist because each adapts its regulations to suit its dominant incumbent institutions.
Series:
Working Paper No. 2006/034
Subject:
Bank regulation Banking Capital adequacy requirements Deposit insurance Financial regulation and supervision
English
Publication Date:
January 1, 2006
ISBN/ISSN:
9781451862942/1018-5941
Stock No:
WPIEA2006034
Pages:
25
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