Journal Article
Should increased regulation of bank risk-taking come from regulators or from the market?
Abstract: The heavy losses in bank asset portfolios do not reflect an inherent failure of markets to monitor risk adequately but rather the perverse incentives of the financial safety net to excessive risk-taking. The unsustainable rise in house prices and their subsequent sharp decline derived from the combination of a public policy to expand home ownership to unrealistic levels and from a financial safety net that encouraged excessive risk-taking by banks.
Keywords: Risk; Banks and banking;
Access Documents
File(s):
File format is text/html
https://www.richmondfed.org/-/media/RichmondFedOrg/publications/research/economic_quarterly/2009/spring/pdf/hetzel1.pdf
Description: Full Text
Authors
Bibliographic Information
Provider: Federal Reserve Bank of Richmond
Part of Series: Economic Quarterly
Publication Date: 2009
Volume: 95
Issue: Spr
Pages: 161-200