Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/23996
Authors: 
Schüler, Martin
Year of Publication: 
2003
Series/Report no.: 
ZEW Discussion Papers 03-62
Abstract: 
This paper discusses the incentive conflicts that arise in banking supervision in the EU in a principal-agent framework, where the regulator is the agent and the taxpayers is the principal. The regulatory agent in addition to maintaining financial stability (the objective of the principal) may pursue private interests. Incomplete information, insufficient accountability of the agent and lack of enforceability of compliance result in an incentive problem. A reform of the European supervisory system complemented by strengthening market discipline based on improved disclosure of both the supervisor and the banks may help to solve the European incentive problem.
Subjects: 
banking regulation and supervision
principal-agent
European Union
JEL: 
G21
G28
Document Type: 
Working Paper

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