THE EFFECTS OF REGULATION ON BANK BALANCE SHEET DECISIONS

摘要: THERE ARE TWO IMPORTANT facets to the firm's balance sheet decisions: their contribution profits and effect on soundness or risk of insolvency. A sophisticated portfolio theory literature exists that deals with pricing assets explicitly recognizes relationship between rate return. However, generally assumes firm have unlimited, riskless ability borrow leverage. For commercial banks, liability side must be given at least as much attention asset side, especially in view banks' role financial intermediaries. Furthermore, traditional typically depends assumption perfect markets-a peculiar analysis any intermediary (see Pringle, 1974). Regulators, efforts prevent bank failure, underscore risk-return nature both liabilities. Whether regulators are effective controlling other than very general ways is debatable [see e.g. Mayne, Peltzman, Mingo]. viewing a bank, analytically, same way examiner, can prove instructive, since this orientation not reflected theoretical banking literature. Existent analytical approaches divided into two categories. There group models examine relationship, if any, mix management Klein, Pringle). These micro provide useful framework for analyzing interrelationships inherent particular emphasis maturity structure choice. Another focus has been how factors external influence its behavior. In particular, monetary policy influences credit availability Jaffee Modigliani, Kane Malkiel). But, by largely ignoring requirements attempt impose, passed up potentially firm; attempting maximize profit while recognizing limitations imposed regulatory standards soundness. Only Dudley Luckett's (1970) model behavior incorporates regulator's constraint. paper we present strong neoclassical microeconomic roots. Profit maximization assumed management's goal primary