Jump to ContentJump to Main Navigation
Competition and Stability in BankingThe Role of Regulation and Competition Policy$
Users without a subscription are not able to see the full content.

Xavier Vives

Print publication date: 2016

Print ISBN-13: 9780691171791

Published to Princeton Scholarship Online: January 2018

DOI: 10.23943/princeton/9780691171791.001.0001

Show Summary Details
Page of

PRINTED FROM PRINCETON SCHOLARSHIP ONLINE (www.princeton.universitypressscholarship.com). (c) Copyright Princeton University Press, 2022. All Rights Reserved. An individual user may print out a PDF of a single chapter of a monograph in PRSO for personal use.date: 26 May 2022

Fragility in Banking and the Role of Regulation

Fragility in Banking and the Role of Regulation

(p.37) Chapter 3 Fragility in Banking and the Role of Regulation
Competition and Stability in Banking

Xavier Vives

Princeton University Press

This chapter examines the unique characteristics of banks that make them heavily regulated and subject to public intervention. It first explains the roots of fragility, contagion, and systemic risk in the banking sector before discussing as an example of fragility the development and crisis of shadow banking in the 2007–2009 crisis. It then considers the regulatory response to banking fragility with the establishment of prudential regulation and the safety net, the side effects of regulation, and the reasons behind the regulatory failure in the 2007–2009 crisis, along with the main measures of the regulatory reform that followed, including the emphasis on macroprudential measures. The chapter concludes with an assessment of regulation in emerging and developing economies and the contrast with developed economies.

Keywords:   fragility, contagion, systemic risk, banking sector, shadow banking, financial crisis, prudential regulation, safety net, regulation, regulatory reform

Princeton Scholarship Online requires a subscription or purchase to access the full text of books within the service. Public users can however freely search the site and view the abstracts and keywords for each book and chapter.

Please, subscribe or login to access full text content.

If you think you should have access to this title, please contact your librarian.

To troubleshoot, please check our FAQs , and if you can't find the answer there, please contact us.