Sub & Super-modularity in International Policy Coordination for Financial Regulation with Politically Influential Banks

• 발행기관: 고려대학교 미래성장연구원
• 저자명: Young Han Kim
• 간행물 정보: 『미래성장연구소 Working Paper』2014 Working Paper, 1~28쪽, 전체 28쪽
• 주제분류: 경제경영 > 경제학
• 파일형태: PDF
• 발행일자: 2014.01.01

영문 초록

This paper determines the equilibria of international policy coordination game in both cases of submodularity and supermodularity of financial regulatory policies. Moreover, we examine the conditions for financial regulatory policy coordination mechanism to be self-enforcing considering the cross-border externalities caused by multinational banks and the political influences of the banking sectors. Given submodularity of financial regulatory policies with relatively high monitoring costs, when the asymmetry of the political influences of banking sectors is bigger, each country is more likely to reduce regulatory efforts with increased incentives for free riding. Supermodularity of regulatory policies with lower monitoring costs reduces the incentives to free ride regulatory efforts. However, over-sensitive responses to other countries’ policies aggravate financial instability due to multiple equilibria caused by the supermodularity of the regulatory policies. When informational barriers are considered, if noisy signals observed by regulators are reduced, financial instability due to multiple equilibria can be avoided.

목차

Abstract

1. Introduction

2. Model

3. Policy coordination for financial regulation with strategic substitutability of regulatory policies

4. Policy coordination for financial regulation with strategic complementarity of regulatory policies

5. Concluding remarks

References

키워드

Submodularity and Supermodularity of Financial Regulatory Policies International Policy Coordination Cross-border externalities in Banking Regulation Capital Requirements Financial Stability