Arbeitspapier
Illiquidity, Insolvency, and Banking Regulation
This paper provides a compact framework for banking regulation analysis in the presence of uncertainty between systemic liquidity and solvency shocks. It explains the asset price anomalies and bank lending freeze during the crisis. The paper shows how the coexistence of illiquidity and insolvency problems adds extra cost for banking regulation, making conventional regulatory policies fail, and why the unconventional central bank policy encourages moral hazard. A banking tax is proposed to cover the extra regulatory cost, and the regulatory cost can also be reduced by combining the advantages of several instruments.
- ISBN
-
978-82-7553-623-3
- Language
-
Englisch
- Bibliographic citation
-
Series: Working Paper ; No. 2011/13
- Classification
-
Wirtschaft
Banks; Depository Institutions; Micro Finance Institutions; Mortgages
Financial Institutions and Services: Government Policy and Regulation
- Subject
-
liquidity risk
insolvency risk
liquidity regulation
equity requirement
banking tax
- Event
-
Geistige Schöpfung
- (who)
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Cao, Jin
- Event
-
Veröffentlichung
- (who)
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Norges Bank
- (where)
-
Oslo
- (when)
-
2011
- Handle
- Last update
-
10.03.2025, 11:44 AM CET
Data provider
This object is provided by:
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
ZBW - Deutsche Zentralbibliothek für Wirtschaftswissenschaften - Leibniz-Informationszentrum Wirtschaft. If you have any questions about the object, please contact the data provider.
Object type
- Arbeitspapier
Associated
- Cao, Jin
- Norges Bank
Time of origin
- 2011
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