Optimal supervisory policies and depositor-preference laws

BIS Working Papers | No 131 | 01 March 2003by Henri Pagès and João SantosPDF full text (517kb) | 42 pagesWhen supervisors have imperfect information about the soundness of banks, they may be unaware of insolvency problems that develop in the interval between on-site examinations. Supervising banks more often will alleviate this problem but will increase the costs of supervision.

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