Banking intermediation and the effectiveness of prudential regulation: a microeconomic approach.

Summary In a period of financial fragility that some compare to that of the 1930s, this thesis, devoted to the effectiveness of prudential regulation of banks, aims to shed light on the opportunity, the stakes and the possible direction of a reform of the latter. Our reflection, although focused on regulation, is necessarily supported by that carried out on intermediation. Moreover, we take a microeconomic approach that borrows essentially from industrial economics and information economics. This thesis is organized in four parts. The first part is based on a review of the literature devoted to banking economics and proposes to renew the study of the reasons for regulation. We insist on the fundamental complementarity of the different modes of regulation of the banking activity (internal control, market discipline, regulation). We also emphasize the acuteness of agency problems, both at the level of the theoretical analysis of banking and its regulation, and at the level of the analysis of current banking difficulties, insofar as the problems of productive inefficiency appear minor in our application of the DEA. The second part is a state of the art of the practice and theory of banking regulation. The third part extends the reflection to the evolution of intermediation and its impact on the efficiency of prudential regulation: the traditional institutional anchoring of regulation is questioned. The rise of bancassurance, which we model, provides a good illustration of the current institutional evolution of financial systems that challenges the regulator. The fourth part intends to contribute to the debate on the opportunity of regulatory reform. Our reform proposal is based on the implementation of a flexible regulation whose properties are studied in a self-selection model. In the form of a simple self-reporting regulation, it would be integrated with other modes of regulation in a dynamic scheme. As part of a global prudential system, free of institutional partitions, it would also allow for an effective supervision of financial conglomerates.