Economics at your fingertips  

Regulation and Bankers’ Incentives

Fabiana Gómez () and Jorge Ponce
Additional contact information
Fabiana Gómez: University of Bristol
Jorge Ponce: Banco Central del Uruguay

Journal of Financial Services Research, 2019, vol. 56, issue 3, 209-227

Abstract: Abstract We study the effects of minimum capital requirements, capital buffers, liquidity regulation and loan loss provisions on the incentives of bankers to exert effort and take excessive risk. These regulations impact differently the behavior of bankers. Capital regulation, liquidity requirements and traditional loan loss provisions for expected losses provide adequate incentives to bankers. Capital requirements are the most powerful instrument. Counter-cyclical (so-called dynamic) loan loss provisions may provide bankers with incentives to gamble. The results help informing the ongoing debate about the harmonization of banking regulation and the implementation of Basel III.

Keywords: Banking regulation; Minimum capital requirement; Capital buffer; Liquidity requirement; (Counter-cyclical) loan loss provision; Bankers’ incentives; Effort; Risk (search for similar items in EconPapers)
JEL-codes: G21 G28 (search for similar items in EconPapers)
Date: 2019
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed

Downloads: (external link) Abstract (text/html)
Access to the full text of the articles in this series is restricted.

Related works:
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:

Ordering information: This journal article can be ordered from

DOI: 10.1007/s10693-018-0303-z

Access Statistics for this article

Journal of Financial Services Research is currently edited by Haluk Unal

More articles in Journal of Financial Services Research from Springer, Western Finance Association Contact information at EDIRC.
Bibliographic data for series maintained by Sonal Shukla ().

Page updated 2020-04-28
Handle: RePEc:kap:jfsres:v:56:y:2019:i:3:d:10.1007_s10693-018-0303-z