Macroeconomic Stability, Bank Soundness, and Designing Optimum Regulatory Structures

George Kaufman ()
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George Kaufman: Loyola University of Chicago, U.S.A. and Federal Reserve Bank of Chicago, U.S.A.

Multinational Finance Journal, 2004, vol. 8, issue 3-4, 141-171

Abstract: This paper focuses on the strong links between macroeconomic stability and bank soundness and argues that if the first is not achieved the second is not likely either with serious adverse consequences. Instability in banking is most often the result of actions by governments directed at the macroeconomy and banks to achieve short-run goals with little consideration for unintended immediate or longer-term consequences. Without government interference, there is little evidence that the banking system is unstable. This paper develops a framework for designing optimum regulatory structures that, if adopted by countries, will help to reduce instability in their banking systems and thereby also in their macroeconomies.

Keywords: bank efficiency; macroeconomic stability; bank soundness; designing optimum regulatory structures (search for similar items in EconPapers)
JEL-codes: E44 G21 G28 (search for similar items in EconPapers)
Date: 2004
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Citations: View citations in EconPapers (4)

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Persistent link: https://EconPapers.repec.org/RePEc:mfj:journl:v:8:y:2004:i:3-4:p:141-171

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