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Regulatory Reform : Integrating Paradigms

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dc.contributor.author de la Torre, Augusto
dc.contributor.author Ize, Alain
dc.date.accessioned 2012-03-19T19:10:18Z
dc.date.available 2012-03-19T19:10:18Z
dc.date.issued 2009-02-01
dc.identifier.uri http://hdl.handle.net/10986/4118
dc.description.abstract The Subprime crisis largely resulted from failures to internalize systemic risk evenly across financial intermediaries and recognize the implications of Knightian uncertainty and mood swings. A successful reform of prudential regulation will need to integrate more harmoniously the three paradigms of moral hazard, externalities, and uncertainty. This is a tall order because each paradigm leads to different and often inconsistent regulatory implications. Moreover, efforts to address the central problem under one paradigm can make the problems under the others worse. To avoid regulatory arbitrage and ensure that externalities are uniformly internalized, all prudentially regulated intermediaries should be subjected to the same capital adequacy requirements, and unregulated intermediaries should be financed only by regulated intermediaries. Reflecting the importance of uncertainty, the new regulatory architecture will also need to rely less on markets and more on "holistic" supervision, and incorporate countercyclical norms that can be adjusted in light of changing circumstances. en
dc.language English
dc.relation.ispartofseries Policy Research working paper ; no. WPS 4842,Proceedings
dc.rights CC BY 3.0 IGO
dc.rights.uri http://creativecommons.org/licenses/by/3.0/igo/
dc.subject LIQUIDITY
dc.subject PRINCIPAL-AGENT PROBLEMS
dc.subject BORROWER
dc.subject DERIVATIVE
dc.subject MONETARY AUTHORITIES
dc.subject DEREGULATION
dc.subject HOUSING FINANCE
dc.subject EFFECTIVE GOVERNANCE
dc.subject MARKET DISCIPLINE
dc.subject INFORMATION ASYMMETRY
dc.subject BROKERAGE ACTIVITIES
dc.subject PRINCIPAL-AGENT PROBLEM
dc.subject ACCOUNTABILITY
dc.subject DEPOSITOR
dc.subject MARKET VALUES
dc.subject MANDATES
dc.subject BALANCE SHEETS
dc.subject CENTRAL BANK
dc.subject INTERNATIONAL BANK
dc.subject MATURITY GAP
dc.subject MUTUAL FUNDS
dc.subject ASSET PRICES
dc.subject RISK AVERSION
dc.subject TRANCHES
dc.subject INVESTMENT OPPORTUNITIES
dc.subject RISK MANAGERS
dc.subject DEBT
dc.subject SALE OF MORTGAGE
dc.subject UNIVERSAL BANKING
dc.subject FINANCIAL INNOVATION
dc.subject INVESTMENT BANKING
dc.subject CHANNEL OF FINANCE
dc.subject FINANCIAL CONGLOMERATES
dc.subject CAPITAL REQUIREMENTS
dc.subject HEDGE FUNDS
dc.subject RISK PREMIUM
dc.subject ASSET PRICE
dc.subject FINANCIAL INTERMEDIARIES
dc.subject PRUDENTIAL REGULATIONS
dc.subject ASSET MANAGERS
dc.subject VALUATIONS
dc.subject CREDIT RISK EXPOSURES
dc.subject SHORT-TERM LIABILITIES
dc.subject WHOLESALE FINANCE
dc.subject TRANSACTION
dc.subject CREDIT DEFAULT SWAPS
dc.subject OVERNIGHT REPOS
dc.subject SMALL BORROWER
dc.subject FINANCIAL SECTOR
dc.subject EQUITY INVESTMENTS
dc.subject SHAREHOLDERS
dc.subject MARKET LIQUIDITY
dc.subject CAPITAL MARKETS
dc.subject MATURITY
dc.subject MARKET RISKS
dc.subject PENSION
dc.subject DEPOSIT
dc.subject FINANCIAL MARKET
dc.subject MORTGAGE LENDING
dc.subject DEPOSITS
dc.subject GOVERNMENT INTERVENTION
dc.subject FINANCIAL DEEPENING
dc.subject MARKET PLAYERS
dc.subject BANK EARNINGS
dc.subject HOLDING
dc.subject HOUSING
dc.subject MARKET FAILURES
dc.subject FAIR VALUE
dc.subject BAILOUTS
dc.subject FINANCIAL REGULATION
dc.subject STOCK PRICES
dc.subject PORTFOLIO
dc.subject RISK TAKING
dc.subject EXPOSURE
dc.subject LIQUID SECONDARY MARKETS
dc.subject MARKET FAILURE
dc.subject CREDIT LINES
dc.subject CAPITAL FLOWS
dc.subject DEPOSIT RATES
dc.subject BID
dc.subject HOUSING PRICES
dc.subject MARKET PARTICIPANTS
dc.subject COORDINATION FAILURE
dc.subject RISKY ASSETS
dc.subject LIQUIDITY CRISES
dc.subject OPPORTUNISTIC BEHAVIOR
dc.subject BANKING SYSTEM
dc.subject CONTRACT ENFORCEMENT
dc.subject TRANSPARENCY
dc.subject LEGISLATION
dc.subject FINANCIAL SYSTEMS
dc.subject FEDERAL RESERVE SYSTEM
dc.subject LEVY
dc.subject REGULATORS
dc.subject INTEREST RATES
dc.subject MORTGAGE-BACKED SECURITIES
dc.subject CONSUMER PROTECTION
dc.subject REGULATOR
dc.subject ACCOUNTING
dc.subject CAPITAL ADEQUACY
dc.subject LENDERS
dc.subject BANK FAILURE
dc.subject RETURNS
dc.subject CAPITAL RATIOS
dc.subject FINANCIAL STABILITY
dc.subject FINANCIAL CRISIS
dc.subject INVESTMENT VEHICLES
dc.subject INSURANCE
dc.subject TRADING
dc.subject FINANCIAL DISTRESS
dc.subject FINANCIAL MARKET PARTICIPANTS
dc.subject FINANCIAL DEVELOPMENTS
dc.subject EQUITY SWAPS
dc.subject SYSTEMIC RISKS
dc.subject INSTRUMENT
dc.subject LIQUIDITY FACILITIES
dc.subject COORDINATION FAILURES
dc.subject MONETARY POLICY
dc.subject REPAYMENTS
dc.subject DERIVATIVE MARKETS
dc.subject SAVINGS
dc.subject ECONOMIC CONDITIONS
dc.subject RATING AGENCIES
dc.subject BROKERAGE
dc.subject DEBT CONTRACTS
dc.subject LIMITED LIABILITY
dc.subject PRUDENTIAL REQUIREMENTS
dc.subject SECURITIES
dc.subject PRUDENTIAL REGULATION
dc.subject GOVERNANCE ISSUES
dc.subject INVESTMENT BANKS
dc.subject FINANCIAL CRISES
dc.subject CREDIT DERIVATIVES
dc.subject MARKET DEVELOPMENT
dc.subject BALANCE SHEET
dc.subject CREDIT MARKET
dc.subject MATURITY MISMATCHES
dc.subject RISK WEIGHT
dc.subject CENTRAL BANKS
dc.subject MARKET-MAKING
dc.subject MORAL HAZARD
dc.subject BANKING SECTOR
dc.subject REAL SECTOR
dc.subject COLLECTIVE ACTION
dc.subject PRUDENTIAL STANDARDS
dc.subject UNDERLYING ASSET
dc.subject AGENCY PROBLEMS
dc.subject FRAUD
dc.subject SECURITIES MARKETS
dc.subject CREDIT DEFAULT
dc.subject BUSINESS OPPORTUNITIES
dc.subject CONSOLIDATED SUPERVISION
dc.subject LENDER-OF-LAST-RESORT
dc.subject PENSION FUNDS
dc.subject SAFETY NET
dc.subject EXCHANGE RATE
dc.subject REPUTATION
dc.subject SOCIAL COSTS
dc.subject NEW MARKETS
dc.subject SECURITIES MARKET
dc.subject INSURANCE COMPANIES
dc.subject INVESTING
dc.subject MATURITY STRUCTURE
dc.subject STOCK MARKET
dc.subject INFORMED INVESTORS
dc.subject RISK MANAGEMENT
dc.subject DERIVATIVE CONTRACTS
dc.subject MORTGAGE
dc.subject REPAYMENT
dc.subject LIQUIDITY RISK
dc.subject REGULATORY REQUIREMENTS
dc.subject CREDIT RISK
dc.subject LIQUID ASSETS
dc.subject TRANSACTION COSTS
dc.subject CAPITAL MARKET
dc.subject ARBITRAGE
dc.subject PORTFOLIOS
dc.subject POLICY RESPONSES
dc.subject AGENCY PROBLEM
dc.subject STOCK TRADING
dc.subject STOCK MARKET PRICE
dc.subject SYSTEMIC RISK
dc.subject GOVERNANCE STANDARDS
dc.subject FINANCIAL MARKETS
dc.subject PUBLIC FUNDS
dc.subject ASYMMETRIC INFORMATION
dc.subject BROKERS
dc.subject BANK FAILURE RESOLUTION
dc.subject PUBLIC POLICY
dc.subject FINANCIAL DEVELOPMENT
dc.subject TREASURY
dc.subject EXTENSION OF CREDIT
dc.subject DEPOSITORS
dc.subject COMMERCIAL BANKS
dc.subject LOAN
dc.subject MALFEASANCE
dc.subject FINANCIAL FLOWS
dc.subject ADVERSE SELECTION
dc.subject CREDITWORTHY BORROWERS
dc.subject INTERNATIONAL ECONOMICS
dc.subject CREDIT CHAIN
dc.subject RISK WEIGHTS
dc.subject INVESTOR PROTECTION
dc.subject FEDERAL RESERVE
dc.subject CREDIT ENHANCEMENTS
dc.subject SOCIAL RISKS
dc.subject FINANCIAL INSTITUTIONS
dc.subject INFLATION
dc.subject SOCIAL COST
dc.subject REGULATORY FRAMEWORK
dc.subject MORTGAGES
dc.subject FINANCIAL SYSTEM
dc.subject SWAP
dc.subject DEPOSIT INSURANCE
dc.subject BUSINESS CYCLE
dc.subject TRADITIONAL BANKING
dc.subject EXTERNALITIES
dc.subject INTEREST RATE
dc.subject PRICE VOLATILITY
dc.subject COMMERCIAL BANKING
dc.subject REGULATORY FORBEARANCE
dc.subject FINANCIAL MANAGEMENT
dc.subject WHOLESALE INVESTORS
dc.subject FINANCIAL CONTRACTS
dc.subject PUBLIC LENDER
dc.subject PRICE RISK
dc.subject STOCKS
dc.title Regulatory Reform : Integrating Paradigms en
dc.rights.holder World Bank


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