Regulatory arbitrage and the e ciency of banking regulation
Pierre Boyer and
Hubert Kempf ()
Additional contact information
Hubert Kempf: CREST; École Normale Supérieure Paris-Saclay
No 2017-06, Working Papers from Center for Research in Economics and Statistics
We study the efficiency of banking regulation under financial integration. Banks freely choose the jurisdiction where to locate their activities and have private information about their efficiency level. Regulators non-cooperatively offer any regulatory contract that satisfies information and participation constraints of banks. We show that the unique Nash equilibrium of the regulatory game is a simple pooling contract: financial integration is characterized by the inability for regulators to dis-criminate between banks with different effciency levels. This result is driven by the endogenous restriction caused by regulatory arbitrage on the capacity of regulators to use several regulatory instruments.
Keywords: Regulatory Arbitrage; Banking regulation; Regulatory competition; Financial integration; Asymmetric information (search for similar items in EconPapers)
JEL-codes: C72 D82 G21 G28 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-cba
References: View references in EconPapers View complete reference list from CitEc
Citations: Track citations by RSS feed
Downloads: (external link)
http://crest.science/RePEc/wpstorage/2017-06.pdf CREST working paper version (application/pdf)
This item may be available elsewhere in EconPapers: Search for items with the same title.
Export reference: BibTeX
RIS (EndNote, ProCite, RefMan)
Persistent link: https://EconPapers.repec.org/RePEc:crs:wpaper:2017-06
Access Statistics for this paper
More papers in Working Papers from Center for Research in Economics and Statistics Contact information at EDIRC.
Bibliographic data for series maintained by Sri Srikandan ().