Bank capital regulation with random audits

Sudipto Bhattacharya, Manfred Plank, Günter Strobl and Josef Zechner

LSE Research Online Documents on Economics from London School of Economics and Political Science, LSE Library

Abstract: We consider a model of optimal bank closure rules (cum capital replenishment by banks), with Poisson-distributed audits of the bank's asset value by the regulator, with the goal of eliminating (ameliorating) the incentives of levered bank shareholders/managers to take excessive risks in their choice of underlying assets. The roles of (tax or other) subsidies on deposit interest payments by the bank, and of the auditing frequency are examined.

JEL-codes: G20 G21 (search for similar items in EconPapers)
Pages: 30 pages
Date: 2000-08-01
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Citations: View citations in EconPapers (2)

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http://eprints.lse.ac.uk/119103/ Open access version. (application/pdf)

Related works:
Journal Article: Bank capital regulation with random audits (2002)
Working Paper: Bank Capital Regulation with Random Audits (2000)
Working Paper: Bank Capital Regulation With Random Audits (2000)
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Persistent link: https://EconPapers.repec.org/RePEc:ehl:lserod:119103

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