Closure Policy when Bank Inspection Can Be Manipulated

Aleix Calveras

Review of Finance, 2003, vol. 7, issue 3, 385-408

Abstract: This paper analyzes inspection and closure policies of a bank, and the strategic reaction of its managers/shareholders when they can (costly) manipulate the information available to the regulator. We derive optimal intervention policy, and analyze its effect on managerial strategies. Regulatory intervention may induce shareholders to manipulate the information available to the regulator in order to avoid intervention and closure, and we find that these incentives to manipulate information may increase with tighter capital requirements. Finally we show that, in order to avoid manipulation by the banker, some degree of forbearance in closure may be ex ante optimal.

Date: 2003
References: Add references at CitEc
Citations: View citations in EconPapers (5)

Downloads: (external link)
http://journals.kluweronline.com/issn/1382-6662/contents (text/html)
Access to full text is restricted to subscribers.

Related works:
Journal Article: Closure Policy when Bank Inspection Can Be Manipulated (2003)
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:kap:eurfin:v:7:y:2003:i:3:p:385-408

Ordering information: This journal article can be ordered from
http://www.springer.com/finance/journal/10679

Access Statistics for this article

Review of Finance is currently edited by Marco Pagano

More articles in Review of Finance from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().