Suchergebnisse

This paper investigates whether a bank regulator should terminate problem banks promptly or exercise forbearance. We construct a dynamic model economy in which entrepreneurs pledge collateral, borrow from banks, and invest in long-term projects. We assume that collateral value has aggregate risk over time, that in any period entrepreneurs can abscond with the projects but losing the collateral, and that depositors can withdraw deposits. We show that optimal regulation exhibits forbearance if the ex-ante probability of collapse in collateral value is sufficiently low, but exhibits prompt termination of problem banks if this probability is sufficiently high

This study examines whether the emerging communication environment makes people perceive media as more or less biased. Do social media contribute to the perception of a hostile media environment? Or do they promote a "friendly" media phenomenon through processes of selective affiliation/exposure and/or user filtration of disagreeable content? Based on the idea of egocentric publics, that is, the emergence of socially networked publics that are key for our understanding of current communication processes and examining these questions in a politically polarized society—Colombia—results indicate that reliance on social media for news exacerbates the perceptions of media bias. These perceptions of bias in turn foster political action in both the "campaigning" and "complaining" dimensions of political engagement. Thus, egocentric publics can be sources of political mobilization, but part of their mobilizing influence works through perceptions of a biased communication environment. Implications of these findings are discussed.

We explore the rationale for regulatory rules that prohibit banks from developing some of their natural activities when their capital level is low, as epitomized by the US Prompt Corrective Action (PCA). This paper is built on two insights. First, in a moral hazard setting, capital requirement regulation may force banks to hold a large fraction of safe assets which, in turn, may lower their incentives to monitor risky assets. Second, agency problems may be more severe in certain asset classes than in others. Taken together, these two ideas explain why, surprisingly, capital regulation, which may cope with risk and adverse selection, is unable to address issues related to moral hazard. Hence, instead of forcing banks to hold a large fraction of safe assets, prohibiting some types of investment and allowing ample scope of investment on others may be the only way to preserve incentives and guarantee funding. In particular, providing incentives to monitor investments in the most opaque asset classes may prove to be excessively costly in terms of the required capital and thus inefficient. We show that the optimal capital regulation consists of a rule that a) allows well capitalized banks to freely invest any amount in any risky asset, b) prohibits banks with intermediate levels of capital to invest in the most opaque risky assets, and c) prohibits undercapitalized banks to invest in any risky asset.

This paper presents data concerning the performance of the U.S. commercial bank supervisory system and identifies a number of needed improvements in areas including: (i) rules governing bank loss recognition, (ii) supervisory response to excessive loan concentrations and poor underwriting standards, (Hi) rules governing dividend payments by troubled banks, and (iv) the early closure or resolution of troubled banks.

AbstractThe corrective action hypothesis predicts that people will take political action in response to media content they perceive to be biased against them, and evidence has accumulated in favor of it. However, research has not yet investigated the hypothesis in comparative context. This study fills that gap in the literature, relying on the Comparative National Election Project (N = 23,527), and analyzing data from 17 countries. Results show evidence of an overall positive relationship between perceived media bias and political action, and they also show evidence that this relationship varies in strength between countries. Moreover, press freedom partially explains this variation. Results are discussed in light of the theory of corrective action and recent trends in political participation worldwide.