Optimal Preventive Bank Supervision: Combining Random Audits and Continuous Intervention

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Mohamed Belhaj; Nataliya Klimenko;
  • Publisher: HAL CCSD
  • Subject: [ SHS.ECO ] Humanities and Social Sciences/Economies and finances | random audit | banking supervision,random audit,incentives,moral hazard,delegation | incentives | [SHS.ECO]Humanities and Social Sciences/Economics and Finance | banking supervision, random audit, incentives, moral hazard, delegation. | banking supervision | moral hazard | delegation
    • jel: jel:G21 | jel:G28

Early regulator interventions into problem banks are one of the key suggestions of Basel II. However, no guidance is given on their design. To fill this gap, we outline an incentive-based preventive supervision strategy that eliminates bad asset management in banks. Two... View more
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