NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

How Offshore Financial Competition Disciplines Exit Resistence by Incentive-Conflicted Bank Regulators

Edward J. Kane

NBER Working Paper No. 7156
Issued in June 1999
NBER Program(s):   CF

This paper studies the impact of technological change and regulatory competition on governmental efforts to generate rents for banks in two stylized regulatory environments. In the first environment, incentive-conflicted regulators attempt to create rents by restricting the size and scope of individual banking organizations. In the second, rents come from efforts to supply deposit guarantees to troubled banks. In both cases, innovations in financial technology and in competing domestic and offshore regulatory arrangements make the costs of delivering rents to banks more transparent to taxpayers and encourage customers to push rent-dependent banking systems into crisis. This analysis portrays the banking crises that have roiled world markets in recent years as information-producing events that identify and discredit inefficient strategies of regulating banking markets.

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Document Object Identifier (DOI): 10.3386/w7156

Published: Journal of Financial Services Research, Vol. 16, no. 2-3 (1999): 265-291. citation courtesy of

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