Series: IMF Working Papers
Author(s): Thierry Tressel , and Thierry Verdier
Publisher: INTERNATIONAL MONETARY FUND
Publication Date: 28 May 2014
Keywords: Banking Regulation, banking, capital adequacy, banking supervision, capital adequacy ratio, General, Financial Markets and the Macroeconomy,
We consider a moral hazard economy in banks and production to study how incentives for risk taking are affected by the quality of supervision. We show that low interest rates may generate excessive risk taking. Bec...