A Behavioral Approach to Financial Supervision, Regulation, and Central Banking

Ashraf Khan

No 2018/178, IMF Working Papers from International Monetary Fund

Abstract: This paper describes how behavioral elements are relevant to financial supervision, regulation, and central banking. It focuses on (1) behavioral effects of norms (social, legal, and market); (2) behavior of others (internalization, identification, and compliance); and (3) psychological biases. It stresses that financial supervisors, regulators, and central banks have not yet realized the full potential that these behavioral elements hold. To do so, they need to devise a behavioral approach that includes aspects relating to individual and group behavior. The paper provides case examples of experiments with such an approach, including behavioral supervision. Finally, it highlights areas for further research.

Keywords: WP; corporate governance; market norm; risk management; social science; crowding out (search for similar items in EconPapers)
Pages: 56
Date: 2018-08-02
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Citations: View citations in EconPapers (6)

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