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Managerial rents and regulatory intervention in troubled banks

Abstract:

In this paper we investigate the effects of regulatory policies on troubled banks. In our analysis banks' portfolio decisions are unobservable and are made by management. Management's decisions are influenced by the compensation and intervention policies of shareholders and regulators as well as the impact of its portfolio choice on its share of firm-specific rents. We demonstrate that firm-specific rents may induce managers to prefer risky asset portfolios. These incentives may be exacerbate...

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Publication date:
1996-01-01
UUID:
uuid:30d0648c-dd2d-4fc9-acda-d07496da738f
Local pid:
oai:eureka.sbs.ox.ac.uk:1135
Deposit date:
2011-11-11

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