Incentive Problems in Banking Supervision : The European Case

@inproceedings{Schler2003IncentivePI,
  title={Incentive Problems in Banking Supervision : The European Case},
  author={Martin Sch{\"u}ler},
  year={2003}
}
This paper discusses the incentive conflicts that arise in banking supervision in the EU in a principal-agent framework, where the regulator is the agent and the taxpayers is the principal. The regulatory agent in addition to maintaining financial stability (the objective of the principal) may pursue private interests. Incomplete information, insufficient accountability of the agent and lack of enforceability of compliance result in an incentive problem. A reform of the European supervisory… CONTINUE READING

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