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Agency problems and goal conflicts

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  • Robert A. Eisenbeis

Abstract

Agency theory is used to evaluate how the European Union (EU) may deal with the resolution of goal and agency conflicts in dealing with failing financial institutions. Experience in the United States suggests that the financial and regulatory structure being put in place, which relies upon country-sponsored deposit insurance funds and home country responsibility for supervision and lender-of-last-resort functions, is not likely to be robust to the failure of a large EU institution that threatens the solvency of the deposit insurance fund or that poses systemic risk. The author concludes that the EU needs a centralized and common approach to dealing with troubled institutions.

Suggested Citation

  • Robert A. Eisenbeis, 2004. "Agency problems and goal conflicts," FRB Atlanta Working Paper 2004-24, Federal Reserve Bank of Atlanta.
    • Handle: RePEc:fip:fedawp:2004-24
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    1. repec:zbw:bofrdp:2007_012 is not listed on IDEAS
    2. Santiago Carbo-Valverde & Edward Kane & Francisco Rodriguez-Fernandez, 2008. "Evidence of Differences in the Effectiveness of Safety-Net Management in European Union Countries," Journal of Financial Services Research, Springer;Western Finance Association, vol. 34(2), pages 151-176, December.
    3. David G. Mayes, 2009. "Optimal Structures for Financial Regulation and Supervision," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(02), pages 7-12, July.
    4. Holopainen, Helena, 2007. "Integration of financial supervision," Bank of Finland Research Discussion Papers 12/2007, Bank of Finland.
    5. Elisabetta Montanaro, 2016. "The process towards centralisation of the European financial supervisory architecture: The case of the Banking Union," PSL Quarterly Review, Economia civile, vol. 69(277), pages 135-172.
    6. Rungporn Roengpitya, 2008. "The Effects of Financial Deregulation on Bank Governance: The Panel Data Evidence of the 1990s," Working Papers 2008-08, Monetary Policy Group, Bank of Thailand.
    7. Frisell, Lars & Roszbach, Kasper & spagnolo, giancarlo, 2008. "Governing the Governors: A Clinical Study of Central Banks," Working Paper Series 221, Sveriges Riksbank (Central Bank of Sweden).
    8. Holopainen, Helena, 2007. "Integration of financial supervision," Research Discussion Papers 12/2007, Bank of Finland.
    9. Gerhardt, Maria & Lannoo, Karel, 2011. "Options for reforming deposit protection schemes in the EU," ECRI Papers 4339, Centre for European Policy Studies.
    10. David G. Mayes, 2009. "Optimal Structures for Financial Regulation and Supervision," ifo DICE Report, ifo Institute - Leibniz Institute for Economic Research at the University of Munich, vol. 7(2), pages 7-12, 07.

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