货币金融学7版本英文课程--11-大学课程2.ppt

Chapter 11 Economic Analysis of Banking Regulation How Asymmetric InformationExplains Banking Regulation 1. Government Safety Net and Deposit Insurance A. Prevents bank runs due to asymmetric information: depositors can’t tell good from bad banks B. Creates moral hazard incentives for banks to take on too much risk C. Creates adverse selection problem of crooks and risk-takers wanting to control banks D. Too-Big-to-Fail increases moral hazard incentives for big banks 2. Restrictions on Asset Holdings A. Reduces moral hazard of too much risk taking How Asymmetric InformationExplains Banking Regulation 3. Bank Capital Requirements A. Reduces moral hazard: banks have more to lose when have higher capital B. Higher capital means more collateral for FDIC 4. Bank Supervision: Chartering and Examination A. Reduces adverse selection problem of risk takers or crooks owning banks B. Reduces moral hazard by preventing risky activities 5. New Trend: Assessment of Risk Management 6. Disclosure Requirements A. Better information reduces asymmetric information problem How Asymmetric InformationExplains Banking Regulation 3. Bank Capital Requirements A. Reduces moral hazard: banks have more to lose when have higher capital B. Higher capital means more collateral for CDIC 4. Bank Supervision: Chartering and Examination A. Reduces adverse selection problem of risk takers or crooks owning banks B. Reduces moral hazard by preventing risky activities C. New trend: Assessment of risk management 5. Disclosure Requirements A. Better information reduces asymmetric information problem Major Banking Legislation in Canada Major Banking Legislation in Canada Why a Banking Crisis in 1980s? Early Stages 1. Managers did not have the required expertise to manage risk 2. The existence of CDIC, more opportunities for risk taking 3. Because of the lending boom, bank activities were becoming more complicated. Regulators had neither the expertise nor the resources to monitor these activities ap