Staatliche Regulierung und internationaler Bankenwettbewerb

• Antragsteller: Professor Dr. Andreas Haufler
• Fachliche Zuordnung: Wirtschaftspolitik, Angewandte Volkswirtschaftslehre
• Förderung: Förderung von 2014 bis 2020
• Projektkennung: Deutsche Forschungsgemeinschaft (DFG) - Projektnummer 266385094

• Erstellungsjahr: 2020

Zusammenfassung der Projektergebnisse

The aim of this project was to contribute to a closer integration of the literature on financial regulation into the literature on public sector economics. More specifically, a core question underlying the project has been whether, and to what extent, regulatory competition in the banking sector follows similar patterns as they are known from the international tax competition for mobile capital. New elements in the literature on financial regulation are the risky nature of banks' business models, a monitoring function of banks to overcome moral hazard and adverse selection among borrowing firms, and governments that provide implicit or explicit guarantees to financial institutions. A first major topic in the research agenda of the project was to study tax and regulatory competition in the financial sector. Gietl and Haufler analyze the competition in bonus taxes when banks compensate their managers by means of fixed and incentive pay, and bank managers are internationally mobile. They show that both a "race to the bottom" or a "race to the top" is a possible outcome in this setting and a "race to the top" in tax rates will occur, if banks and their managers inflict net fiscal losses on taxpayers as a result of incentive pay. Haufler and Maier consider regulatory competition in capital standards, instead of competition in taxes. In their model, capital requirements serve a signaling role, as higher capital standards drive the weakest banks from the market and improve the pool quality in a heterogeneous banking sector. In contrast to the results of the previous literature, they find a "race to the top" in capital standards, consistent with several recent policy developments. A second part of the project focused on multinational banks. Haufler and Wooton asked whether the internationalization strategies of banks, fostered by financial integration, are always desirable. They introduce two frictions to international lending, a transaction cost of cross-border lending, and an additional information cost of monitoring foreign firms. In this setting a reduction in the transaction cost of foreign lending decreases monitoring and will in many cases be welfare decreasing. In contrast, a reduction in the information cost of foreign lending increases monitoring and will generally increase welfare. Müting analyzes the role of regulatory and monetary policy interventions on the share of foreign lending undertaken by multinational banks, employing a model of international duopoly. In the model, negative shocks to bank equity, a tightening of regulatory capital standards and expansionary monetary policy, such as occurred during and after the crisis, all decrease the share of banks' foreign lending and explain why multinational banks have retrenched from their international lending after the 2007-09 financial crisis. The third part of the project analyzed the interaction of regulatory and bailout policies. Maier and Müting ask whether the move to supranational resolution standards, as undertaken in the European banking union, will necessarily be welfare increasing when capital standards remain to be set non-cooperatively. The answer to this question is in the negative, as a well-functioning centralized resolution regime reduces the costs of bank insolvency. This in turn increases the incentives for each government to set capital standards at inefficiently low levels, thus making regulatory competition over capital standards more aggressive. Haufler studied the interaction of regulatory and bailout policies in banking unions, asking whether decisions at each stage are taken in a coordinated or in a non-coordinated fashion. Calibrating this model to the situation in the European banking union, the outcome is that the two countries will always agree on a centralized regulation policy, but maintain decentralized bailout policies – consistent with the policy experience to date.

Projektbezogene Publikationen (Auswahl)

• Multinational banks: Supranational resolution regimes and the importance of capital regulation. Munich Discussion Paper No. 2016-10.
  Maier, Ulf
  
• Bonus taxes and international competition for bank managers. European Economic Review, Vol. 110. 2018, pp. 41-60.
  Gietl, Daniel; Haufler, Andreas
  
• Double tax discrimination to attract FDI and fight profit shifting: The role of CFC rules. Journal of International Economics, Vol. 114. 2018, pp. 25-43.
  Haufler, Andreas; Mardan, Mohammed; Schindler, Dirk
  
• Multinational banks in regulated markets: Is financial integration desirable? CRC TRR 190 Rationality and Competition, Working Paper No. 99
  Haufler, Andreas; Wooton, Ian
  
• Regulatory competition in capital standards: A ‘race to the top’ result. Journal of Banking & Finance, Vol. 106. 2019, pp. 180-194.
  Haufler, Andreas; Maier, Ulf
  
• Multinational lending retrenchment after the global financial crisis: The impact of policy interventions. Munich Discussion Paper No. 2020-02
  Müting, M.
  
• Regulatory and bailout decisions in a banking union. CESifo Working Paper No. 8964. Munich.
  Haufler, Andreas