@inproceedings{Buck2010Managerial,
abstract = {This article provides a theoretical framework to analyze the impact of banking regulation on the risk-taking behavior of banks by incorporatig the incentives of three risk-neutral agents - the welfaristic regulator, the shareholder and the manager. While shareholders are assumed to maximize the discounted flow of bank profits, bank managers maximize expected income choosing from a menu of portfolios with different risk-return profiles. We show under which conditions capital requirements intensify the agency conflict between shareholders and bank managers if complete contracts are impossible. As a result, a government interested in alleviating this divergence will incorporate capital requirements to curb risk-appetite only in those cases in which managerial myopia and the probability of default in the banking-sector are not substantial. Moreover, our model suggests that direct regulation of a manager's bonus system is a substitute for any form of capital requirements.},
address = {Frankfurt a. M.},
author = {Florian Buck},
copyright = {http://www.econstor.eu/dspace/Nutzungsbedingungen},
keywords = {G28; G38; G30; 330; Subprime Crisis; Banking regulation},
language = {eng},
number = {A7-V3},
publisher = {Verein f\"{u}r Socialpolitik},
series = {Beitr\"{a}ge zur Jahrestagung des Vereins f\"{u}r Socialpolitik 2010: \"{O}konomie der Familie - Session: Banking Regulation: Liquidity and Regulatory Capital},
title = {Managerial Prudence under Banking Regulation},
url = {http://hdl.handle.net/10419/37204},
year = {2010}
}
