A Model of Self-Regulation in Banking Industry

14 Pages Posted: 5 Feb 2015

See all articles by Sofiane Aboura

Sofiane Aboura

Université Paris XIII Nord - Department of Economics and Management

Emmanuel Lepinette

Université Paris-Dauphine - CEREMADE, CNRS

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Date Written: February 4, 2015

Abstract

This article derives a model of self-regulation where banks issue insurance products to hedge their own leverage ratio. This approach is an alternative policy to Basel regulation for controlling systemic risk without increasing equity level.

Then, we construct two insurability indicators informative about the attractiveness of these hedging instruments. Their implementation, on each of the 22 banks of 5 major countries from 2005 to 2012, reveals the cartography of fragility of several banks.

Suggested Citation

Aboura, Sofiane and Lepinette, Emmanuel, A Model of Self-Regulation in Banking Industry (February 4, 2015). Available at SSRN: https://ssrn.com/abstract=2560178 or http://dx.doi.org/10.2139/ssrn.2560178

Sofiane Aboura

Université Paris XIII Nord - Department of Economics and Management ( email )

99 avenue Jean-Baptiste
Clément, Villetaneuse 93430
France

Emmanuel Lepinette (Contact Author)

Université Paris-Dauphine - CEREMADE, CNRS ( email )

Place du Marechal de Lattre de Tassigny
Paris Cedex 16, 75775
France

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