Although nation-based systems of financial regulation constitute a second-best approach to global welfare maximization …

assets to survive runs. Regulation similar to the liquidity coverage ratio and the net stable funding ratio (that are soon be … implemented) can change the bank's incentives so that runs are less likely. Optimal regulation would not mimic these rules …

Regulation consists of rulemaking and enforcement. Economic theory offers two complementary rationales for regulating … and efficiency across society as a whole. Agency-cost theory recognizes that incentive conflicts and coordination problems … arise in multi- party relationships and that regulation introduces opportunities to impose rules that enhance the welfare of …

This paper sets forth a discussion framework for the information requirements of systemic financial regulation. It …

how capital regulation, liquidity regulation, deposit insurance, loan to value limits, and dividend taxes interact to … offset these frictions. We compare agents welfare in the decentralized equilibrium absent regulation with welfare in … equilibria that prevail with various regulations that are optimally chosen. In general, regulation can lead to Pareto …

costs as well as the benefits of capital regulation and to accommodate the behavioral response of banks in terms of their … on the effectiveness of capital regulation, i.e., the extent to which banks can "cheat" …