A regulatory arbitrage game: Off-balance-sheet leverage and financial fragility

Autor:	Dimitris Voliotis
Jazyk:	angličtina
Rok vydání:	2022
Předmět:	financial fragility congestion games price of anarchy best response potential Political institutions and public administration (General) JF20-2112 Economic theory. Demography HB1-3840
Zdroj:	Journal of Mechanism and Institution Design, Vol 7, Iss 1, Pp 131-150 (2022)
Druh dokumentu:	article
ISSN:	2399-844X 2399-8458
DOI:	10.22574/jmid.2022.12.005
Popis:	This study examines a simple banking system in a game-theoretic framework wherein banks act as self-interested agents to maximize leverage at the expense of overall financial stability. The resultant strategic inefficiency raises concerns about how banks manage the "financial stability" good, which is appropriated into a "tragedy of the commons." We conceptualize the inefficiency using the price of anarchy introduced by Koutsoupias and Papadimitriou (2009). We seek the optimal regulatory framework that minimizes the price of anarchy or the degree of financial fragility.
Databáze:	Directory of Open Access Journals
Externí odkaz:	https://doaj.org/article/72322b2fdaac4f9b8fb1e0b2d51c82b1 Zobrazit plný text záznamu View record in DOAJ