Bank capital structure and regulation: Overcoming and embracing adverse selection

• 成果类型: Article
• 署名作者: Biswas, Sonny; Koufopoulos, Kostas
• 署名单位: University of Bristol; University of York - UK
• 刊物名称: JOURNAL OF FINANCIAL ECONOMICS
• ISSN/ISSBN: 0304-405X
• DOI: 10.1016/j.jfineco.2021.12.001
• 发表日期: 2022
• 页码: 973-992
• 关键词: Adverse selection; Costly bank capital; Optimal capital requirements; Disclosure requirements

摘要

We study bank regulation under optimal contracting, absent exogenous distortions. In equilibrium, banks offer a senior claim (deposits) to external investors and retain equity; the return on equity is higher than the return on deposits due to a scarcity of skilled bankers. Inefficient equilibria emerge under asymmetric information. Optimally designed regulation restores efficiency. Our main result is that disclosure requirements by themselves can be endogenously costly because they may push the economy from a separating equilibrium to a less efficient equilibrium that pools good and bad banks, but always improve welfare when combined with capital regulation. (c) 2021 Elsevier B.V. All rights reserved.