|
on Regulation |
| By: | Tooraj Jamasb; Rabindra Nepal |
| Abstract: | Incentive regulation needs to adapt to the emerging changes in the operating environment of the electricity networks and take into account the security of these. This paper assesses the current issues and options in economic regulation of network security across the European electricity systems. An output oriented incentive regulatory approach combines the efficiency promoting mechanisms in a revenue cap framework with output based incentives such as better provision of network security. Thus, incentive regulation is destined to move from pursuing the optimal to being more practical. The RIIO regulatory framework in the UK and the service quality regulation in Italy provide good examples of application of output-based regulation. We also propose an output-based approach for regulation of network security, which accounts for the risks from natural, accidental and malicious threats. We conclude that regulation for network security may also involve looking beyond economic network regulation and focus on the wider security policy and regulation interface considering the risks facing the electricity networks. |
| Keywords: | network security, exceptional events, incentive regulation, output-based |
| JEL: | L51 L94 L98 |
| Date: | 2014–08–04 |
| URL: | http://d.repec.org/n?u=RePEc:cam:camdae:1425&r=reg |
| By: | World Bank |
| Keywords: | Water Supply and Sanitation - Town Water Supply and Sanitation Water Resources - Water and Industry Water Supply and Sanitation - Urban Water Supply and Sanitation Water Supply and Sanitation - Water Supply and Sanitation Governance and Institutions Infrastructure Economics and Finance - Infrastructure Regulation |
| Date: | 2013–06 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:16730&r=reg |
| By: | Urmila Chatterjee; Ravi Kanbur |
| Keywords: | Finance and Financial Sector Development - Microfinance Small Scale Enterprise Social Protections and Labor - Labor Policies Social Protections and Labor - Labor Markets Regulatory Regimes Public Sector Development Industry |
| Date: | 2013–12 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:16717&r=reg |
| By: | Vittoria Cerasi; Tommaso Oliviero |
| Abstract: | This paper analyzes the relation between CEOs monetary incentives, financial regulation and risk in banks. We present a model where banks lend to opaque entrepreneurial projects to be monitored by managers; managers are remunerated according to a pay-for-performance scheme and their effort is unobservable to depositors and shareholders. Within a prudential regulatory framework that defines a capital requirement and a deposit insurance, we study the effect of increasing the variable component of managerial compensation on risk taking. We then test empirically how monetary incentives provided to CEOs in 2006 affected banks’ stock price and volatility during the 2007-2008 financial crisis on a sample of large banks around the World. The cross-country dimension of our sample allows us to study the interaction between CEO incentives and financial regulation. The empirical analysis suggests that the sensitivity of CEOs equity portfolios to stock prices and volatility has been indeed related to worse performance in countries with explicit deposit insurance and weaker monitoring by shareholders. This evidence is coherent with the main prediction of the model, that is, the variable part of the managerial compensation, combined with weak insiders’ monitoring, exacerbates the risk-shifting attitude by managers. |
| Keywords: | managerial compensation, risk taking, financial regulation, monitoring |
| JEL: | G21 G38 |
| Date: | 2014–07 |
| URL: | http://d.repec.org/n?u=RePEc:mib:wpaper:279&r=reg |
| By: | James Bernstein, Leroi Raputsoane and Eric Schaling |
| Abstract: | This study assesses the behaviour of credit extension over the economic cycle to determine its usefulness as a reference guide for implementing the countercyclical capital buffers for financial institutions in South Africa. The study finds that the common reference guide for implementing the countercyclical capital buffers, which is based on the gap between the ratio of aggregate private sector credit to gross domestic product and its long term trend, increases during the economic cycle busts, while such a relationship is broken during the economic cycle booms. The study also finds that this common reference guide decreases during the upturns in the economic cycle, while it increases during the periods of downturns in the economic cycle. Thus credit extension should be used with caution as a common reference guide to determine the level of the countercyclical capital buffers for financial institutions in South Africa. |
| Keywords: | Credit Procyclicality, Financial Regulation |
| JEL: | C32 E32 E61 G21 |
| Date: | 2014 |
| URL: | http://d.repec.org/n?u=RePEc:rza:wpaper:445&r=reg |
| By: | Burçhan Sakarya (BRSA (Banking Regulation and Supervision Agency), Strategy Development Department, Turkey) |
| Abstract: | Following the 2007-8 Global Crisis, a significant shift is observed towards the international regulatory approach about the banks. Apart from reform efforts from international institutions such as the IMF, G20 and BIS, several proposals are set forward in some advanced financial systems. Moreover, it is debated that, these so called structural bank reform efforts, also present a chance to indirectly solve the issue of “To-big-to-fail” problem, the SIFI-“systemically Important Financial Institution” problem by its new title. In this study the fundamental characteristics of globally known structural bank reform initiatives are compared and a panel data analysis conducted for the Turkish commercial banks for the 2002-2012 period to investigate the effect of risk diversification on profitability to test for diversification in bank activities. |
| Keywords: | : Structural Reforms in Banking, Turkish Banking Sector |
| JEL: | G21 G01 C23 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:eyd:cp2013:21&r=reg |
| By: | Skanderson, David (Charles River Associates); Ritter, Dubravka (Federal Reserve Bank of Philadelphia) |
| Abstract: | This paper discusses some of the key fair lending risks that can arise in various stages of the marketing, acquisition, and management of credit card accounts, and the analysis that can be employed to manage such risks. The Equal Credit Opportunity Act (ECOA) and its implementing Regulation B prohibit discrimination in all aspects of credit transactions and include specific provisions relating to processes that employ credit scoring models. This paper discusses some of the areas of credit card operations that may be assessed in an effort to manage the risk of noncompliance with fair lending laws and regulations. Particular attention is focused on approaches to testing for the risk of disparate impact on a prohibited basis in credit scoring models and model-intensive prescreened marketing campaigns, as well as in judgmental credit card underwriting. The paper concludes by discussing how the fair lending risks associated with credit scoring models may be managed by synchronizing compliance oversight with an institution's model governance framework. The methods discussed in this paper are also applicable to other consumer credit products that utilize credit scoring models. |
| Keywords: | ECOA; Regulation B; Discrimination; Fair lending; Consumer lending; disparate treatment; Disparate impact; Credit card; Scoring model; Model governance |
| JEL: | G21 G28 K23 |
| Date: | 2014–08–18 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedpdp:14-02&r=reg |
| By: | Tröger, Tobias |
| Abstract: | This paper analyzes the evolving architecture for the prudential supervision of banks in the euro area. It is primarily concerned with the likely effectiveness of the SSM as a regime that intends to bolster financial stability in the steady state. By using insights from the political economy of bureaucracy it finds that the SSM is overly focused on sharp tools to discipline captured national supervisors and thus underincentives their top-level personnel to voluntarily contribute to rigid supervision. The success of the SSM in this regard will hinge on establishing a common supervisory culture that provides positive incentives for national supervisors. In this regard, the internal decision making structure of the ECB in supervisory matters provides some integrative elements. Yet, the complex procedures also impede swift decision making and do not solve the problem adequately. Ultimately, a careful design and animation of the ECB-defined supervisory framework and the development of inter-agency career opportunities will be critical. The ECB will become a de facto standard setter that competes with the EBA. A likely standoff in the EBA’s Board of Supervisors will lead to a growing gap in regulatory integration between SSM-participants and other EU Member States. Joining the SSM as a non-euro area Member State is unattractive because the current legal framework grants no voting rights in the ECB’s ultimate decision making body. It also does not supply a credible commitment opportunity for Member States who seek to bond to high quality supervision. -- |
| Keywords: | prudential supervision,banking union,regulatory capture,political economy of bureaucracy,Single Supervisory Mechanism (SSM),European Central Bank (ECB),European Banking Authority (EBA) |
| JEL: | G21 G28 H77 K22 K23 L22 |
| Date: | 2013 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:imfswp:73&r=reg |
| By: | World Bank |
| Keywords: | Finance and Financial Sector Development - Access to Finance Banks and Banking Reform Private Sector Development - Emerging Markets Finance and Financial Sector Development - Debt Markets Private Sector Development - E-Business |
| Date: | 2013–11 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wboper:16736&r=reg |