Macro Prudential Policies from a Micro Prudential Angle

The standard macro(prudential) models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes. This paper explicitly models individual banks' risk choices and shows that different pr...

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Main Authors:	Cordella, Tito, Pienknagura, Samuel
Format:	Policy Research Working Paper
Language:	English en_US
Published:	World Bank, Washington, DC 2014
Subjects:	AGENCY PROBLEMS BANK BAILOUTS BANK DIRECTOR BANK LIQUIDITY BANK RISK BANK RISK TAKING BANK RISK-TAKING BANKS BORROWING BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STRUCTURE COST OF CAPITAL CREDIT INCREASES DEBT DEFAULT RISK DEMAND CURVE DEMAND DEPOSITS DEMAND FOR CREDIT DEPOSIT DEPOSITORS DEVELOPMENT BANK DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMIC PERFORMANCE ECONOMIC THEORY EUROPEAN CENTRAL BANK EXCESSIVE RISK EXTERNAL LIABILITIES EXTERNALITIES EXTERNALITY FINANCIAL CRISES FINANCIAL FRAGILITY FINANCIAL INNOVATION FINANCIAL INTERMEDIATION FINANCIAL REGULATION FORM OF COLLATERAL INSTRUMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK LEVELS OF RISK LEVERAGE LEVY LIABILITY LIABILITY STRUCTURE LIQUIDITY REQUIREMENTS LIQUIDITY RISK LOAN MACROECONOMIC MODELS MARKET POWER MINIMUM CAPITAL REQUIREMENT MINIMUM CAPITAL REQUIREMENTS MONETARY POLICY MORAL HAZARD NEGATIVE EXTERNALITIES OBLIGATIONS TO DEPOSITORS POLITICAL ECONOMY PORTFOLIO PORTFOLIOS PRUDENTIAL REGULATION REGULATORY FRAMEWORK RESERVE RESERVE REQUIREMENTS RETURNS RISK CHOICES RISK TAKING RISK-TAKING INCENTIVES SYSTEMIC RISK TAX TAX ON DEPOSITS TAXATION macroprudential regulation microprudential regulation
Online Access:	http://documents.worldbank.org/curated/en/2013/12/18634314/macro-prudential-policies-micro-prudential-angle http://hdl.handle.net/10986/16937

id	okr-10986-16937
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spelling	okr-10986-169372021-04-23T14:03:33Z Macro Prudential Policies from a Micro Prudential Angle Cordella, Tito Pienknagura, Samuel AGENCY PROBLEMS BANK BAILOUTS BANK DIRECTOR BANK LIQUIDITY BANK RISK BANK RISK TAKING BANK RISK-TAKING BANKS BORROWING BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STRUCTURE COST OF CAPITAL CREDIT INCREASES DEBT DEFAULT RISK DEMAND CURVE DEMAND DEPOSITS DEMAND FOR CREDIT DEPOSIT DEPOSITORS DEVELOPMENT BANK DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMIC PERFORMANCE ECONOMIC THEORY EUROPEAN CENTRAL BANK EXCESSIVE RISK EXTERNAL LIABILITIES EXTERNALITIES EXTERNALITY FINANCIAL CRISES FINANCIAL FRAGILITY FINANCIAL INNOVATION FINANCIAL INTERMEDIATION FINANCIAL REGULATION FORM OF COLLATERAL INSTRUMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK LEVELS OF RISK LEVERAGE LEVY LIABILITY LIABILITY STRUCTURE LIQUIDITY REQUIREMENTS LIQUIDITY RISK LOAN MACROECONOMIC MODELS MARKET POWER MINIMUM CAPITAL REQUIREMENT MINIMUM CAPITAL REQUIREMENTS MONETARY POLICY MORAL HAZARD NEGATIVE EXTERNALITIES OBLIGATIONS TO DEPOSITORS POLITICAL ECONOMY PORTFOLIO PORTFOLIOS PRUDENTIAL REGULATION REGULATORY FRAMEWORK RESERVE RESERVE REQUIREMENTS RETURNS RISK CHOICES RISK TAKING RISK-TAKING INCENTIVES SYSTEMIC RISK TAX TAX ON DEPOSITS TAXATION macroprudential regulation microprudential regulation The standard macro(prudential) models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes. This paper explicitly models individual banks' risk choices and shows that different prudential instruments affect banks' risk-taking incentives differently. Thus, conflicts may arise between the micro and macro prudential stance. 2014-02-05T18:50:06Z 2014-02-05T18:50:06Z 2013-12 http://documents.worldbank.org/curated/en/2013/12/18634314/macro-prudential-policies-micro-prudential-angle http://hdl.handle.net/10986/16937 English en_US Policy Research Working Paper;No. 6721 CC BY 3.0 IGO http://creativecommons.org/licenses/by/3.0/igo/ World Bank World Bank, Washington, DC Publications & Research :: Policy Research Working Paper Publications & Research
repository_type	Digital Repository
institution_category	Foreign Institution
institution	Digital Repositories
building	World Bank Open Knowledge Repository
collection	World Bank
language	English en_US
topic	AGENCY PROBLEMS BANK BAILOUTS BANK DIRECTOR BANK LIQUIDITY BANK RISK BANK RISK TAKING BANK RISK-TAKING BANKS BORROWING BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STRUCTURE COST OF CAPITAL CREDIT INCREASES DEBT DEFAULT RISK DEMAND CURVE DEMAND DEPOSITS DEMAND FOR CREDIT DEPOSIT DEPOSITORS DEVELOPMENT BANK DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMIC PERFORMANCE ECONOMIC THEORY EUROPEAN CENTRAL BANK EXCESSIVE RISK EXTERNAL LIABILITIES EXTERNALITIES EXTERNALITY FINANCIAL CRISES FINANCIAL FRAGILITY FINANCIAL INNOVATION FINANCIAL INTERMEDIATION FINANCIAL REGULATION FORM OF COLLATERAL INSTRUMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK LEVELS OF RISK LEVERAGE LEVY LIABILITY LIABILITY STRUCTURE LIQUIDITY REQUIREMENTS LIQUIDITY RISK LOAN MACROECONOMIC MODELS MARKET POWER MINIMUM CAPITAL REQUIREMENT MINIMUM CAPITAL REQUIREMENTS MONETARY POLICY MORAL HAZARD NEGATIVE EXTERNALITIES OBLIGATIONS TO DEPOSITORS POLITICAL ECONOMY PORTFOLIO PORTFOLIOS PRUDENTIAL REGULATION REGULATORY FRAMEWORK RESERVE RESERVE REQUIREMENTS RETURNS RISK CHOICES RISK TAKING RISK-TAKING INCENTIVES SYSTEMIC RISK TAX TAX ON DEPOSITS TAXATION macroprudential regulation microprudential regulation
spellingShingle	AGENCY PROBLEMS BANK BAILOUTS BANK DIRECTOR BANK LIQUIDITY BANK RISK BANK RISK TAKING BANK RISK-TAKING BANKS BORROWING BUSINESS CYCLE BUSINESS CYCLES CAPITAL FLOWS CAPITAL REGULATION CAPITAL REQUIREMENT CAPITAL REQUIREMENTS CAPITAL STRUCTURE COST OF CAPITAL CREDIT INCREASES DEBT DEFAULT RISK DEMAND CURVE DEMAND DEPOSITS DEMAND FOR CREDIT DEPOSIT DEPOSITORS DEVELOPMENT BANK DEVELOPMENT ECONOMICS DEVELOPMENT POLICY ECONOMIC PERFORMANCE ECONOMIC THEORY EUROPEAN CENTRAL BANK EXCESSIVE RISK EXTERNAL LIABILITIES EXTERNALITIES EXTERNALITY FINANCIAL CRISES FINANCIAL FRAGILITY FINANCIAL INNOVATION FINANCIAL INTERMEDIATION FINANCIAL REGULATION FORM OF COLLATERAL INSTRUMENT INTEREST RATE INTEREST RATES INTERNATIONAL BANK LEVELS OF RISK LEVERAGE LEVY LIABILITY LIABILITY STRUCTURE LIQUIDITY REQUIREMENTS LIQUIDITY RISK LOAN MACROECONOMIC MODELS MARKET POWER MINIMUM CAPITAL REQUIREMENT MINIMUM CAPITAL REQUIREMENTS MONETARY POLICY MORAL HAZARD NEGATIVE EXTERNALITIES OBLIGATIONS TO DEPOSITORS POLITICAL ECONOMY PORTFOLIO PORTFOLIOS PRUDENTIAL REGULATION REGULATORY FRAMEWORK RESERVE RESERVE REQUIREMENTS RETURNS RISK CHOICES RISK TAKING RISK-TAKING INCENTIVES SYSTEMIC RISK TAX TAX ON DEPOSITS TAXATION macroprudential regulation microprudential regulation Cordella, Tito Pienknagura, Samuel Macro Prudential Policies from a Micro Prudential Angle
relation	Policy Research Working Paper;No. 6721
description	The standard macro(prudential) models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes. This paper explicitly models individual banks' risk choices and shows that different prudential instruments affect banks' risk-taking incentives differently. Thus, conflicts may arise between the micro and macro prudential stance.
format	Publications & Research :: Policy Research Working Paper
author	Cordella, Tito Pienknagura, Samuel
author_facet	Cordella, Tito Pienknagura, Samuel
author_sort	Cordella, Tito
title	Macro Prudential Policies from a Micro Prudential Angle
title_short	Macro Prudential Policies from a Micro Prudential Angle
title_full	Macro Prudential Policies from a Micro Prudential Angle
title_fullStr	Macro Prudential Policies from a Micro Prudential Angle
title_full_unstemmed	Macro Prudential Policies from a Micro Prudential Angle
title_sort	macro prudential policies from a micro prudential angle
publisher	World Bank, Washington, DC
publishDate	2014
url	http://documents.worldbank.org/curated/en/2013/12/18634314/macro-prudential-policies-micro-prudential-angle http://hdl.handle.net/10986/16937
_version_	1764434989337804800

Macro Prudential Policies from a Micro Prudential Angle

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