Bank regulation and supervision and its welfare implications
Date
2012-03
Authors
Kilinc, M.
Neyapti, B.
Editor(s)
Advisor
Supervisor
Co-Advisor
Co-Supervisor
Instructor
Source Title
Economic Modelling
Print ISSN
0264-9993
Electronic ISSN
1873-6122
Publisher
Elsevier BV
Volume
29
Issue
2
Pages
132 - 141
Language
English
Type
Journal Title
Journal ISSN
Volume Title
Series
Abstract
This study provides a general equilibrium model to explore the welfare implications of bank regulation and supervision (RS). The model supports the basic expectations regarding the positive effects of RS on the growth rate, output, credit, investment, wages and profits; and its negative effects on the interest rate. In addition, RS is observed to lead to a convergence effect. Furthermore, it is observed that the decision of banks to monitor and charge differentiated interest rates to firms depends on the distribution of firm-specific moral hazard rates; bank monitoring increases profits as the distribution of producer type improves. (C) 2011 Elsevier B.V. All rights reserved.