Regulatory Capture in Banking

International Monetary Fund

No 2006/034, IMF Working Papers from International Monetary Fund

Abstract: Banks will want to influence the bank regulator to favor their interests, and they typically have the means to do so. It is shown that such "regulatory capture" in banking does not imply ineffectual regulation; a "captured" regulator may impose very tight, costly prudential requirements to reduce negative spillovers of risk-taking by weaker banks. In these circumstances, differences in the regulatory regime across jurisdictions may persist because each adapts its regulations to suit its dominant incumbent institutions.

Keywords: WP; capitalized bank; bank; central bank; interest rate (search for similar items in EconPapers)
Pages: 25
Date: 2006-01-01
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Citations: View citations in EconPapers (18)

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