Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/310982 
Year of Publication: 
2023
Citation: 
[Journal:] Journal of Banking Regulation [ISSN:] 1750-2071 [Volume:] 25 [Issue:] 2 [Publisher:] Palgrave Macmillan [Place:] London [Year:] 2023 [Pages:] 197-208
Publisher: 
Palgrave Macmillan, London
Abstract: 
This article analyses the optimal punishment structure set by a regulator in banking markets under asymmetric information. Relying on a theoretical model, we analyse whether a decreasing, constant, or increasing sanction scheme deters potentially repeated offences in banking. We find that an increasing punishment structure is efficient in reducing gambling bank behaviour. This holds if and only if the regulator's detection probability is low or the amount gambled by the bank, if it would cheat, is high. With this paper, we provide justification for the current policy practice.
Subjects: 
Banking
Excessive risk
Moral hazard
Enforcement
Repeat offenders
JEL: 
D82
G21
K42
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by Logo
Document Type: 
Article
Document Version: 
Published Version

Files in This Item:
File
Size





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.