Book contents
- Frontmatter
- Contents
- List of Figures, Tables, and Appendices
- Preface
- Rethinking Bank Regulation
- 1 Introduction
- 2 Contrasting Approaches to Bank Regulation
- 3 How Are Banks Regulated and Supervised Around the World?
- 4 What Works Best?
- 5 Choosing Bank Regulations
- 6 Rethinking Bank Regulation
- Appendices
- References
- Index
5 - Choosing Bank Regulations
Published online by Cambridge University Press: 06 July 2010
- Frontmatter
- Contents
- List of Figures, Tables, and Appendices
- Preface
- Rethinking Bank Regulation
- 1 Introduction
- 2 Contrasting Approaches to Bank Regulation
- 3 How Are Banks Regulated and Supervised Around the World?
- 4 What Works Best?
- 5 Choosing Bank Regulations
- 6 Rethinking Bank Regulation
- Appendices
- References
- Index
Summary
“… my aim will not be to provide a detailed program of policy but rather to state the criteria by which particular measures must be judged if they are to fit into a regime of freedom. It would be contrary to the whole spirit of this book if I were to consider myself competent to design a comprehensive program of policy. Such a program, after all, must grow out of the application of a common philosophy to the problems of the day.”
(Hayek, 1960, p. 5)RECAP AND MOTIVATION
As discussed in Chapter 4, the empirical results are broadly consistent with the private interest view of bank supervisory and regulatory policies and generally inconsistent with the public interest view. For instance, the public interest view suggests that supervisory agencies adopt regulatory restrictions on bank activities and limit the entry of new banks to promote the safety and soundness of the banking system. Yet, we find that these policies do not lower the probability of banking crises. Rather, they increase both net interest margins and bank overhead costs, which is more consistent with the private interest hypothesis that narrow interests will use bank regulations to enrich and protect special interests in society. Similarly, the public interest view suggests that countries will empower official supervisory agencies so that they can more effectively monitor banks and induce banks to behave in a socially efficient manner.
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- Information
- Rethinking Bank RegulationTill Angels Govern, pp. 258 - 306Publisher: Cambridge University PressPrint publication year: 2005
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