 Prudential Regulation for BanksMark J. Flannery
Chapter 7 in Financial Stability in a Changing Environment, 1995, pp 281-328 from Palgrave Macmillan Abstract: Abstract Banking firms around the world operate under extensive government supervision and regulation. In part, these regulatory structures seek to reduce the likelihood that individual banks will fail, and these are the regulatory components which I define as ‘prudential’ in this chapter. Prudential regulations include minimum capital requirements, liquidity or loan portfolio diversification standards, limitations on a bank’s investment portfolio or lines of business, and other restrictions intended to limit the type of risks which a banking firm may undertake. This chapter’s main purpose is to evaluate the role of prudential government regulation of modern banking firms in developed financial markets. This evaluation cannot be undertaken without first establishing the appropriate purpose of government bank regulation. Indeed, an argument for prudential regulation implicitly asserts that the supervision and control exerted by private market forces is somehow inappropriate. Carefully specifying and addressing this contention constitutes a large part of my analysis here. Keywords: Central Bank; Credit Risk; Deposit Insurance; Bank Failure; Market Discipline (search for similar items in EconPapers) There are no downloads for this item, see the EconPapers FAQ for hints about obtaining it. Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:pal:palchp:978-1-349-13352-9_8 Ordering information: This item can be ordered from DOI: 10.1007/978-1-349-13352-9_8 Access Statistics for this chapter More chapters in Palgrave Macmillan Books from Palgrave Macmillan |
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