Multiple safety net regulators and agency problems in the EU: Is Prompt Corrective Action partly the solution?

David Mayes, María Nieto () and Larry Wall
Additional contact information
María Nieto: Banco de España

No 819, Working Papers from Banco de España

Abstract: This paper presents a stylized mechanism aimed at dealing with the cross border agency problems that arise in supervising and resolving cross border banking groups in the European Union (EU). The authors assume that PCA policies have been implemented by the national supervisors and explore the institutional changes needed in Europe if PCA is to be effective as an incentive compatible mechanism. The paper identifies these changes starting with enhancements in the availability of information on banking groups to supervisors. Next, the paper considers the collective decision making by supervisors with authority to make discretionary decisions within the PCA framework as soon as a bank of a cross border banking group falls below the minimum capital standard. Finally, the paper analyzes the coordination measures that should be implemented if PCA requires the bank to be resolved.

Keywords: banking supervision; European Union; Prompt Corrective Action (search for similar items in EconPapers)
JEL-codes: F20 G28 K23 (search for similar items in EconPapers)
Pages: 34 pages
Date: 2008-09
New Economics Papers: this item is included in nep-ban, nep-eec, nep-law and nep-reg
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

Downloads: (external link)
http://www.bde.es/f/webbde/SES/Secciones/Publicaci ... o/08/Fic/dt0819e.pdf First version, September 2008 (application/pdf)

Related works:
Journal Article: Multiple safety net regulators and agency problems in the EU: Is Prompt Corrective Action partly the solution? (2008)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:bde:wpaper:0819

Access Statistics for this paper

More papers in Working Papers from Banco de España Contact information at EDIRC.
Bibliographic data for series maintained by Ángel Rodríguez. Electronic Dissemination of Information Unit. Research Department. Banco de España ().