Regulations of Banking Groups

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dc.contributor.author	Harr, Thomas	en_US
dc.contributor.author	Rønde, Thomas	en_US
dc.date.accessioned	2009-02-04T10:28:18Z
dc.date.available	2009-02-04T10:28:18Z
dc.date.issued	2007-12-17T00:00:00Z	en_US
dc.identifier.uri	http://hdl.handle.net/10398/7708
dc.description.abstract	We study the optimal regulation of banking groups ("banks”), taking both minimum capital requirements and legal structure into account. A bank can set up either as one legal unit facing limited liability jointly (branch structure) or as a bank holding company with subsidiaries (subsidiary structure). Banks are exposed to risk from their unobservable asset choices and to exogenous risk from their environment. We show that banks with branches are more prudent in normal times than banks with subsidiaries, but are also less prudent when problems arise. A regulator that observes banks’ exogenous risk should optimally determine both capital requirements and legal structure. If the exogenous risk is private information to banks, it can be optimal to screen banks according to risk by setting capital requirements appropriately, and letting banks choose their legal structure.	en_US
dc.format.extent	33 s.	en_US
dc.language	eng	en_US
dc.relation.ispartofseries	Discussion paper;2007-01	en_US
dc.title	Regulations of Banking Groups	en_US
dc.type	wp	en_US
dc.accessionstatus	modt07dec17 nijemo	en_US
dc.contributor.corporation	Copenhagen Business School. CBS	en_US
dc.contributor.department	Centre for Economic and Business Research	en_US
dc.contributor.departmentshort	CEBR	en_US
dc.contributor.departmentuk	Centre for Economic and Business Research	en_US
dc.contributor.departmentukshort	CEBR	en_US
dc.idnumber	x656555989	en_US
dc.publisher.city	København	en_US
dc.publisher.year	2006	en_US