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It is argued that the liberalization of financial markets and the increasing mobility of customers have rendered national banking regulation increasingly ineffective and led to a process of deregulation. Capital adequacy rules are the central instrument for a starting process of reregulation and...

The paper discusses effort-aversion moral hazard in banks. When the evaluation and monitoring of loans requires private management effort, monitoring efforts are sensitive to the intensity of competition in the credit market. Equilibrium loan rates incorporate an oligopoly premium and a...