Rethinking the Principles of Bank Regulation: A Review of Admati and Hellwig's The Bankers' New Clothes
Journal of Economic Literature
vol. 52,
no. 1, March 2014
(pp. 197-210)
Abstract
In an important new book, Anat Admati and Martin Hellwig raise broad critical questions about bank regulation. These questions are reviewed and discussed here, with a focus on how the problems of maintaining a stable financial system depend on fundamental problems of information and incentives in financial intermediation. It is argued that financial regulatory reforms can be reliably effective only when their basic principles are understood by informed citizens, and that Admati and Hellwig's book is a major contribution toward this goal, as it clearly lays out the essential case for requiring banks to have more equity.Citation
Myerson, Roger B. 2014. "Rethinking the Principles of Bank Regulation: A Review of Admati and Hellwig's The Bankers' New Clothes." Journal of Economic Literature, 52 (1): 197-210. DOI: 10.1257/jel.52.1.197Additional Materials
JEL Classification
- G01 Financial Crises
- G21 Banks; Depository Institutions; Micro Finance Institutions; Mortgages
- G28 Financial Institutions and Services: Government Policy and Regulation
- G32 Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
- L51 Economics of Regulation
- M48 Accounting and Auditing: Government Policy and Regulation