David H. McIlroy
Regulating Risk: A Measured Response to the Banking Crisis
McIlroy, David H.
Authors
Abstract
This paper argues that regulatory responses to the sub-prime crisis ought to be guided by the fundamental principle that bank regulation is justified by the adverse consequences of banks taking excessive risks. It therefore proposes three reforms: requiring banks to retain a proportion of any loan which they originate, so as to reduce the risks of moral hazard; insisting that the risks involved in the financial products in which banks trade are transparent; and reforming Basel II so that the amounts of regulatory capital which banks are required to hold are less pro-cylical than is currently the case.
Citation
McIlroy, D. H. (2008). Regulating Risk: A Measured Response to the Banking Crisis. Journal of Banking Regulation, 9(4), 284-292. https://doi.org/10.1057/jbr.2008.15
Journal Article Type | Article |
---|---|
Publication Date | Aug 1, 2008 |
Deposit Date | Sep 29, 2008 |
Journal | Journal of Banking Regulation |
Print ISSN | 1745-6452 |
Electronic ISSN | 1750-2071 |
Publisher | Palgrave Macmillan |
Peer Reviewed | Peer Reviewed |
Volume | 9 |
Issue | 4 |
Pages | 284-292 |
DOI | https://doi.org/10.1057/jbr.2008.15 |
Keywords | ORIGINATE AND DISTRIBUTE; SECURITISATION; MORAL HAZARD; RISK TRANSPARENCY; BASEL II; TOO BIG TO FAIL |
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