628 - Spillover of domestic regulation to emerging markets

Wetenschappelijke publicatie
Date 1 July 2000

Correlation between the risks of portfolios of different commercial banks leads to too much risk taking from a social planner's perspective. The presence of a regulator omproves this risk-benefit allocation of the financial system. In this paper I show that first-best regulation also leads to more attention for the fundamentals of countries to which capital is lent out. Key words: Bank Regulation, Spillovers, Fundamentals Jel codes: G28, L16, F34, E58