Restoring Banking Stability: Beyond Supervised Capital Requirements

Gerard Caprio and Patrick Honohan

Journal of Economic Perspectives, 1999, vol. 13, issue 4, 43-64

Abstract: Emerging economies have been particularly prone to financial sector crises, reflecting marked information asymmetries and political interference, as well as the substantial volatility in underlying economic conditions, and the vulnerability of banking and finance when structural economic changes create a new and uncharted operating environment. The standard regulatory paradigm relies mainly on supervised capital adequacy, but it may not be enough. Other measures to improve the incentive structure for bankers, regulators, and other market participants could effectively increase the number of concerned, skilled and watchful eyes. Intermittent application of supplementary "blunt instruments" could also be useful.

JEL-codes: G21 O16 (search for similar items in EconPapers)
Date: 1999
Note: DOI: 10.1257/jep.13.4.43
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Citations: View citations in EconPapers (81)

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