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 …

public stewardship. Corporate-governance theory suggests that incentive-based deferred compensation could intensify the force …

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 …

Minimum capital requirements are a central tool of banking regulation. Setting them balances a number of factors …, including any effects on the cost of capital and in turn the rates available to borrowers. Standard theory predicts that, in …

capital regulation. The model captures the sharp and persistent drop in macro-economic aggregates and credit provision as well …

underlie our structural model, we can quantify the impact capital regulation and other government interventions have on bank … taking by banks, but increased risk taking by firms. Capital regulation lowers bank leverage but can lead to compensating …

was due to financial and product market frictions, interacting with statutory reserve regulation that allowed life …