Designing Bank Regulation with Accounting Discretion

Kinda Hachem

No 20251215, Liberty Street Economics from Federal Reserve Bank of New York

Abstract: Why does the banking industry remain prone to large and costly disruptions despite being so heavily regulated? Is there a need for more regulation, less regulation, or simply different regulation? Our recent Staff Report combines insights from academic research in economics, finance, and accounting to provide a deeper understanding of the challenges involved in designing and implementing bank regulation, as well as opportunities for future exploration. This post focuses on the regulation of bank capital, but the ideas are applicable more broadly.

Keywords: bank regulation; accounting discretion; shadow banking; regulatory arbitrage; financial stability; optimal policy (search for similar items in EconPapers)
JEL-codes: D62 E44 G21 G28 M41 (search for similar items in EconPapers)
Date: 2025-12-15
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Persistent link: https://EconPapers.repec.org/RePEc:fip:fednls:102211

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DOI: 10.59576/lse.20251215

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