Incentive Audits : A New Approach to Financial Regulation

Čihá ; k, Martin ; Demirgü ; ç ; -Kunt, Aslı ; Johnston, R. Barry

World Bank, Washington, DC

关键词: ACCOUNTABILITY;    ACCOUNTING;    ADVANCED ECONOMIES;    ADVERSE SELECTION;    ARBITRAGE;   

DOI  :  10.1596/1813-9450-6308
RP-ID  :  WPS6308

学科分类：社会科学、人文和艺术（综合）

来源: World Bank Open Knowledge Repository

【 摘 要 】

A large body of evidence points tomisaligned incentives as having a key role in the run-up tothe global financial crisis. These include bankmanagers' incentives to boost short-term profits andcreate banks that are "too big to fail,"regulators' incentives to forebear and withholdinformation from other regulators in stressful times, andcredit rating agencies' incentives to keep issuing highratings for subprime assets. As part of the response to thecrisis, policymakers and regulators also attempted toaddress some incentive issues, but various outside observershave criticized the response for being insufficient. Thispaper proposes a pragmatic approach to re-orientingfinancial regulation to have at its core the objective ofaddressing incentives on an ongoing basis. Specifically, thepaper proposes "incentive audits" as a tool thatcould help in identifying incentive misalignments in thefinancial sector. The paper illustrates how such auditscould be implemented in practice, and what the implicationswould be for the design of policies and frameworks tomitigate systemic risks.