Abstract
This short essay deals with universal banking in an environment in which a government safety net (for example deposit insurance) results in a moral hazard problem for banks. It argues that universal banking significantly exacerbates the problem. Specifically, universal banking extends the distortion of incentives caused by moral hazard to other sectors of the economy.
Original language | English (US) |
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Pages (from-to) | 655-662 |
Number of pages | 8 |
Journal | Journal of Banking and Finance |
Volume | 23 |
Issue number | 2 |
DOIs | |
State | Published - Feb 1999 |
Keywords
- Bank regulation
- Commercial banking
- G21
- Universal banking