Hierarchical bank supervision
This paper presents a model in which a central and a local supervisor contribute their efforts to obtain information on the solvency of a local bank, which is then used by the central supervisor to decide on its early liquidation. This hierarchical model is contrasted with the alternatives of decentralized and centralized supervision, where only the local or the central supervisor collects information and decides on liquidation. The local supervisor has a higher bias against liquidation (supervisory capture) and a lower cost of getting local information (proximity). Hierarchical supervision is the optimal institutional design when the bias of the local supervisor is high but not too high and the costs of getting local information from the center are low but not too low. With low (high) bias and high (low) cost it is better to concentrate all responsibilities in the local (central) supervisor.
Year of publication: |
2018
|
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Authors: | Repullo, Rafael |
Published in: |
SERIEs - Journal of the Spanish Economic Association. - Heidelberg : Springer, ISSN 1869-4195. - Vol. 9.2018, 1, p. 1-26
|
Publisher: |
Heidelberg : Springer |
Subject: | Centralized versus decentralized supervision | Strategic information acquisition | Bank solvency | Bank liquidation | Supervisory capture | Optimal institutional design |
Saved in:
freely available
Type of publication: | Article |
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Type of publication (narrower categories): | Article |
Language: | English |
Other identifiers: | 10.1007/s13209-017-0171-z [DOI] 1024920933 [GVK] hdl:10419/195266 [Handle] |
Classification: | G21 - Banks; Other Depository Institutions; Mortgages ; G23 - Pension Funds; Other Private Financial Institutions ; D02 - Institutions: Design, Formation, and Operations |
Source: |
Persistent link: https://www.econbiz.de/10011994611
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