Tailoring Bank Capital Regulation for Tail Risk
type: Distribution
access URL: https://shs.hal.science/halshs-00796490
format: HTML
issued: 2026-05-13T17:53:57.946918
modified: 2026-05-13T17:53:57.869235

test_moissonnage_selune
type: Agent

Tailoring Bank Capital Regulation for Tail Risk
type: Dataset
contact point: Organization
  fn: CCSD
keyword: capital-requirements
keyword: shsecohumanities-and-social-scienceseconomics-and-finance
keyword: infoeu-reposemanticspreprint
keyword: preprints-working-papers-
keyword: tail-risk
keyword: moral-hazard
keyword: incentive-compensation
keyword: recapitalization
landing page: https://shs.hal.science/halshs-00796490
description: The experience of the 2007-09 financial crisis has showed that the bank capital regulation in place was inadequate to deal with "manufacturing" tail risk in the financial sector. This paper proposes an incentive-based design of bank capital regulation aimed at efficiently dealing with tail risk engendered by bank top managers. It has two specific features: (i) first, it incorporates information on the optimal incentive contract between bank shareholders and bank managers, thereby dealing with the internal agency problem; (ii) second, it relies on the mechanism of mandatory recapitalization to ensure this contract is adopted by bank shareholders.
issued: 2026-05-13T17:53:57.902960
language: en
modified: 2026-05-13T17:53:57.902964