Abstract
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.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
References
Baumol, William, John C. Panzar, and Robert Willig. “On the Theory of Contestable Markets.” in eds., G.F. Matthewson and Joseph E. Stiglitz, New Developments in the Theory of Industrial Structure. Cambridge, MA: MIT Press, 1986.
Becker, Gary. “A Theory of Competition Among Pressure Groups for Political Influence.” Quarterly Journal of Economics 98 (1983), 37–40.
Caprio, Gerald, and Daniela Klingebeil. “Bank Insolvency: Bad Luck, Bad Policy, or Bad Banking?” Annual Conference on Development Economics. Washington, DC: The World Bank, 1996, pp. 79–104.
Claessens, Stijn, Ash Demirguç-Kunt, and Harry Huizenga. “How Does Foreign Entry Affect the Domestic Banking Market?” Washington, DC: The World Bank Development Research Group, mimeo, 1997.
Dooley, Michael R “A Model of Crises in Emerging Markets.” Cambridge, MA: National Bureau of Economic Research, NBER Working Paper No. 6300, December 1997.
Hiemstra, Stephen, Stephen Kane, Thomas Lutton, and P.A.V.B. Swamy. “A New Method of Forecasting Bank Resolutions.” Washington, DC: Office of the Comptroller of the Currency, mimeo, 1997.
Kane, Edward J. “Financial Regulation and Market Forces.” Swiss Journal of Economics and Statistics (July, 1991 ), 325–342.
Kane, Edward J. “De Jure Interstate Banking: Why Only Now?” Journal of Money, Credit, and Banking 28 (1996), 141–161.
Kane, Edward J. “Implication of Superhero Metaphors for the Issue of Banking Powers.” Journal of Banking and Finance 22 (1998a).
Kane, Edward J. “Capital Movements, Asset Values, and Banking Policy in Globalized Markets.” In Seongtae Lee, ed., The Implications of Globalization of Financial Markets. Seoul: Bank of Korea Conference Proceedings, 1998b, pp. 278–298.
Kindleberger, Charles P. Manias, Panics, and Crashes: A History of Financial Crises. New York: Basic Books, 1978.
Minsky, Hyman. “A Theory of Systemic Fragility.” In Edward Altman and Arnold Sametz, (eds.), Financial Crises: Institutions and Markets in a Fragile Financial Environment. New York: Wiley-Interscience, 1977.
Ohlson, James A. The Theory of Financial Markets and Information. Amsterdam: Elsevier Science Publishers, 1987.
Ors, Evren. “The Sensitivity of Inferences About Bank Efficiency to Data-Set Selection.” draft of Ph.D. dissertation, Boston College, Department of Finance, 1999.
Pelzman, Sam. “Toward a More General Theory of Regulation.” Journal of Law and Economics 19 (1976), 211–241.
Pomerleano, Michael. “The Banking Regulatory Framework in Asia—A Survey.” Washington, DC: The World Bank (unpublished draft of August 21, 1997 ).
Selgin, George. “Real versus Pseudo Free Trade in Banking: A Critique of NAFTA’s Financial Services Provisions.“ In James A. Dorn and Roberto Salinas-Leòn, (eds.), Money and Markets in the Americas: New Challenges for Hemispheric Integration. Vancouver, BC: The Frasier Institute, 1996, pp. 177–202.
Stigler, George. “The Theory of Economic Regulation.” Bell Journal of Economics 1 (Spring 1971 ), 3–21.
Stiglitz, Joseph E. “Some Lessons from the East Asian Miracle.” The World Bank Research Observer 11 (August 1996), 151–177.
Todd, Walker. “History of International Lending.” In G. Kaufman ed., Research in Policy. Greenwich, CT: JAI Press, 1991, pp. 201–289.
Wagster, John D. “Impact of the Basle Accord on International Banks.” Journal of Finance 51 (1996), 1321–1346.
Author information
Authors and Affiliations
Editor information
Editors and Affiliations
Rights and permissions
Copyright information
© 2000 Springer Science+Business Media New York
About this chapter
Cite this chapter
Kane, E.J. (2000). How Offshore Financial Competition Disciplines Exit Resistance by Incentive-Conflicted Bank Regulators. In: Eisenbeis, R.A., Furlong, F.T., Kwan, S. (eds) Financial Modernization and Regulation. Springer, Boston, MA. https://doi.org/10.1007/978-1-4757-5228-1_13
Download citation
DOI: https://doi.org/10.1007/978-1-4757-5228-1_13
Publisher Name: Springer, Boston, MA
Print ISBN: 978-1-4419-4964-6
Online ISBN: 978-1-4757-5228-1
eBook Packages: Springer Book Archive