[Read] ➪ Systemic Risk and Optimal Regulatory Architecture Author Juan Solé – E17streets4all.co.uk Until the recent financial crisis the safety and soundness of financial institutions was assessed from the perspective of the individual institution The financial crisis highlighted the need to take s Until the and Optimal ePUB ✓ recent financial crisis the safety and soundness of financial institutions was assessed from the perspective of the individual institution The financial crisis highlighted the need to take systemic externalities seriously when rethinking prudential oversight and the regulatory architecture Current financial reform legislation worldwide reflects this intent However these reforms have overlooked the need to also consider regulatory agencies' forbearance and information sharing incentives In a political economy model that explicitly accounts for systemic connectedness and regulators' incentives we show that under an expanded mandate to explicitly
Systemic Risk MOBI :ò oversee systemic risk regulators would be forbearing towards systemically important institutions We also show that when some regulators have access to information regarding an institutions' degree of systemic importance these regulators may have little incentive to gather and share it with other regulators These findings suggest that and we show conditions under which a unified regulatory arrangement can reduce the degree of systemic risk vis vis a multiple regulatory arrangement.
- 26 pages
- Systemic Risk and Optimal Regulatory Architecture
- Juan Solé
- 21 October 2014 Juan Solé