Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/152750
Authors: 
Holthausen, Cornelia
Rønde, Thomas
Year of Publication: 
2004
Series/Report no.: 
ECB Working Paper 316
Abstract: 
This paper analyzes cooperation between sovereign national authorities in the supervision and regulation of a multinational bank. We take a political economy approach to regulation and assume that supervisors maximize the welfare of their own country. The communication between the supervisors is modeled as a 'cheap talk' game. We show that: (1) unless the interests of the countries are perfectly aligned, Þrst best closure regulation cannot be implemented; (2) the more aligned the interests are, the higher is welfare; (3) the bank can allocate its investments strategically across countries to escape closure.
Subjects: 
cheap talk
closure
multinational banks
supervision
JEL: 
F36
G21
G28
L51
Document Type: 
Working Paper

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