Bond, Philip; Goldstein, Itay; Prescott, Edward S. - Federal Reserve Bank of Richmond - 2006
Various laws and policy proposals call for regulators to make use of the information reflected in market prices. We … focus on a leading example of such a proposal, namely that bank supervision should make use of the market prices of traded … market prices, prices adjust to reflect this use and potentially become less revealing. We show that the feasibility of this …