Arbeitspapier
Prudential discipline for financial firms: Micro, macro, and market structures
The recent global financial crisis reflects numerous breakdowns in the prudential discipline of financial firms. This paper discusses ways to strengthen micro- and macroprudential supervision and restore credible market discipline. The discussion notes that microprudential supervisors are typically assigned a variety of goals that sometimes have conflicting policy implications. In such a setting, the structure of the regulatory agencies and the priority given to prudential goals are critical to achieving those goals. The analysis of macroprudential supervision emphasizes that this supervisor must be both bold and modest: bold in seeking to understand the sources and distributions of systemically important risks and modest about what a supervisor can do without imposing overly restrictive regulations. Finally, the paper argues that the primary responsibility for risk management must rest with firms, not government supervisors. Unfortunately, systemic risk concerns have led governments to shield the private sector from the full losses that dull their incentive to discipline risk taking. This section of the paper suggests that deposit insurance reform, special resolutions for systemically important firms, and requirements that firms plan for their own resolution and contingent capital may all have a role to play in restoring effective market discipline.
- Language
-
Englisch
- Bibliographic citation
-
Series: Working Paper ; No. 2010-9
- Classification
-
Wirtschaft
Financial Institutions and Services: Government Policy and Regulation
Financial Markets and the Macroeconomy
Regulated Industries and Administrative Law
- Subject
-
financial
microprudential
macroprudential
market discipline
- Event
-
Geistige Schöpfung
- (who)
-
Wall, Larry D.
- Event
-
Veröffentlichung
- (who)
-
Federal Reserve Bank of Atlanta
- (where)
-
Atlanta, GA
- (when)
-
2010
- Handle
- Last update
-
10.03.2025, 11:43 AM CET
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
- Wall, Larry D.
- Federal Reserve Bank of Atlanta
Time of origin
- 2010
Other Objects (12)
Prudential discipline for financial firms: Micro, macro, and market structures
Allocating macro-prudential powers
Is macro prudential regulation possible?
Macro-Prudential Policy: An Assessment
On the derminants of banking crises : micro- and macro-prudential approaches
Financial Innovation: Macro-economic and Macro-prudential Consequences
Financial Crises and Macro-Prudential Policies
Understanding the shift from micro to macro-prudential thinking: a discursive network analysis
Understanding the shift from micro to macro-prudential thinking: A discursive network analysis
Favoritism and firms: Micro evidence and macro implications
Favoritism and firms: Micro evidence and macro implications
Favoritism and Firms: Micro Evidence and Macro Implications
Prudential discipline for financial firms: Micro, macro, and market structures
Allocating macro-prudential powers
Is macro prudential regulation possible?
Macro-Prudential Policy: An Assessment
On the derminants of banking crises : micro- and macro-prudential approaches
Financial Innovation: Macro-economic and Macro-prudential Consequences
Financial Crises and Macro-Prudential Policies
Understanding the shift from micro to macro-prudential thinking: a discursive network analysis
Understanding the shift from micro to macro-prudential thinking: A discursive network analysis
Favoritism and firms: Micro evidence and macro implications
Favoritism and firms: Micro evidence and macro implications
Favoritism and Firms: Micro Evidence and Macro Implications
Prudential discipline for financial firms: Micro, macro, and market structures
Allocating macro-prudential powers
Is macro prudential regulation possible?
Macro-Prudential Policy: An Assessment
On the derminants of banking crises : micro- and macro-prudential approaches
Financial Innovation: Macro-economic and Macro-prudential Consequences
Financial Crises and Macro-Prudential Policies
Understanding the shift from micro to macro-prudential thinking: a discursive network analysis
Understanding the shift from micro to macro-prudential thinking: A discursive network analysis
Favoritism and firms: Micro evidence and macro implications
Favoritism and firms: Micro evidence and macro implications