Restoring Banking Stability: Beyond Supervised Capital Requirements | Zendy

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Restoring Banking Stability: Beyond Supervised Capital Requirements

Author(s) -

Patrick Honohan

Publication year - 1999

Publication title -

the journal of economic perspectives

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 9.614

H-Index - 196

eISSN - 1944-7965

pISSN - 0895-3309

DOI - 10.1257/jep.13.4.43

Subject(s) - capital requirement , economics , incentive , volatility (finance) , vulnerability (computing) , finance , leverage (statistics) , financial stability , capital (architecture) , monetary economics , business , financial system , market economy , computer security , archaeology , machine learning , computer science , history

Emerging economies have been particularly prone to financial sector crises, reflecting marked information asymmetries and political interference, as well as the substantial volatility in underlying economic conditions, and the vulnerability of banking and finance when structural economic changes create a new and uncharted operating environment. The standard regulatory paradigm relies mainly on supervised capital adequacy, but it may not be enough. Other measures to improve the incentive structure for bankers, regulators, and other market participants could effectively increase the number of concerned, skilled and watchful eyes. Intermittent application of supplementary "blunt instruments" could also be useful.

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