The Simple Economics of Bank Regulation
Bibliographic Data
| ID | 9723256 |
|---|---|
| Authors | H R Wills (corresponding author) |
| Year | 1982 |
| Volume | 49 |
| Issue | 195 |
| Pages | 249 |
| Publication date | 1982-08-01 |
| Peer Reviewed | Yes |
| Open Access | No |
| Type | ARTICLE |
| Venue | Economica (JOURNAL) |
| Journal identifiers | ISSN: 0013-0427 • E-ISSN: 1468-0335 |
| Publisher | JSTOR (PUBLISHER) |
| DOI | 10.2307/2553625 |
| OpenAlex | W1986028357 |
| Language | EN |
| Citations received | 4 |
This paper discusses the effects of central bank regulation of the banking system carried out to control the level of bank lending. Prudential regulation, designed to reduce the frequency of bank failure-a problem in the economics of uncertainty and information-is not considered. The main point of this paper is that bank regulation, in so far as it is effective, and goes beyond the general effects of government intervention in credit markets, can be seen as a tax on transactions intermediated through banks. The variations in the incidence and beneficiaries of the tax provide a convenient framework for the different regulatory schemes. The paper focuses on the effect of regulation on an individual bank. The theory presented here is an elementary comparative static one, based on the equality of marginal cost and marginal revenue. It does not consider the more complicated issues of dynamic control. However, it is unlikely that any policy that has unsatisfactory comparative static properties will be successful. The main ideas of this approach are due to Tobin (1963) and Johnson (1967,197 1). They have been further developed in work by Spencer and Mowl (1978), and Artis and Miller (1978). However, the application of the analysis to the effects of different types of regulation is, I believe, new. A general equilibrium model in the same spirit as the partial equilibrium model used here is given by Fama (1980). The following section presents a simple model of the banking system. Section II discusses the effect of government intervention and regulation, and Section III looks at the way in which government regulation induces disintermediation. Section IV applies the previous results to consider various actual or proposed schemes in practice. The final section draws conclusions
Control (management) · Economic interventionism · Economics · General equilibrium theory · Government (linguistics) · Intervention (counseling) · Marginal cost · Microeconomics · Miller · Monetary economics · Partial equilibrium · Point (geometry) · Revenue · Simple (philosophy) · Accounting · Banking stability, regulation, efficiency · Economic theories and models
Corporate Bank Borrowing in the UK, 1965-1981
Precautionary and Speculative Aspects of the Behaviour of Banks in the United Kingdom Under Competition and Credit Control 1972-1980
The endogeneity of credit money
Interest rate restrictions and deposit opportunities for small savers in developing countries
| Unique citing works | 4 |
|---|---|
| Citations per year | 0,1 |
| Citation span | 1984 - 1989 (6) |
| Citation velocity | historical |
| Highly cited | No |
| Citation types | Neutral: 2 |