Central banks, regulatory capture and banking supervision reform

Pierre Boyer and Jorge Ponce

No 2010003, Documentos de trabajo from Banco Central del Uruguay

Abstract: Should central banks be in charge of micro-prudential as well as of macro-prudential supervision? This paper uses a formal model to analyze that question, and thereby informs the current reform efforts on the fields of banking supervision. Our main finding is that, while there are good reasons for central banks to conduct macroprudential supervision, it is socially optimal that another supervisor conducts micro-prudential supervision when supervisors’ capture by bankers is a concern

Keywords: Central banks; banking supervision reform; prudential supervision; regulatory capture; institutional organization (search for similar items in EconPapers)
JEL-codes: D42 G24 (search for similar items in EconPapers)
Pages: 33 pages
Date: 2010-09-25
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Citations: View citations in EconPapers (3)

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