THE IMPORTANCE OF USING BANK SUPERVISION AND REGULATION TO PROMOTE MARKET DISCIPLINE OF BANKS

ABSTRACT. Rochet studies how one might protect central banks while preserving the flexibility of the current interbank market. Landier and Ueda introduce the benchmark Modigliani-Miller Framework, assume no scope for debt renegotiation and compares several restructuring options under fixed restructuring surplus to achieve the target default probability of a bank, and examine how the restructuring design affects the surplus. Barth et al. seek to identify which approach to regulation and supervision best enhances bank performance.

JEL: E58, G24