The purpose of this paper is to present a framework forincentive-compatible regulation that would enable regulatorsto ensure that riskier banks maintain higher capitalholdings.Under the precommitment approach, a bankannounces the appropriate level of capital that covers themaximum value of...

[...]In this paper, we therefore consider how riskmeasures, based on internal models of this type, might beintegrated into a firm’s own methodology for allocatingrisk capital to its individual business units and for determiningits optimal capital structure. We also consider theimplications of...

This morning, I would like to give a few practical commentson capital adequacy from an insurance companyperspective. In doing so, I will present two views on capitaladequacy and capital allocation in the insurance industry.The first view is the regulatory perspective, that is, themotivations...

[...]This paper focuses on the relative emphasis thatthe structure of regulatory capital places on formulas andon supervision. The two are not viewed as mutually exclusive,but as elements to which capital policy implicitlyassigns relative weights. We will see that in U.S. regulatorypractice,...

A large literature studies bank regulatory policies intendedto control moral hazard problems associated with depositinsurance and optimal regulatory design. Much of theanalysis has focused on uniform bank capital requirements,risk-based capital requirements, risk-based or fairly pricedinsurance...

It is a great pleasure for me to be here and to participate inthe discussion of the future of capital adequacy regulation.I would like to compliment the organizers of this conferenceon the programme they have set up, covering manyrelevant topics, and the range of experts they have beenable to...

I am very pleased to be part of this forward-looking conferenceon developments in capital regulation. Because thepurpose of capital is to support risk, I decided to approachthis session from the viewpoint of someone leading aninstitution that depends, for its success or failure, on howwell it...

In the view of most policymakers and economists,competition in retail banking takes place in localmarkets covering a relatively small geographic area.Banks are thought to design their services and settheir loan and deposit rates in response to the supply anddemand conditions prevailing in a...

As derivatives markets have grown, thescope of financial intermediation hasevolved beyond credit intermediation tocover a wide variety of risks. Financialderivatives allow dealers to intermediate the risk managementneeds of their customers by unbundling customerexposures and reallocating them...

[...]This study is the first formal investigation ofconsumer attitudes that compares the forecasting power ofthe University of Michigan’s Index of Consumer Sentimentand the Conference Board’s Consumer Confidence Index.We begin with a background analysis of structural differencesbetween the...