Essays on the regulation of banks.

Summary This thesis is a collection of three articles on the regulation of banks. The first chapter studies the optimal regulation of the use of derivative instruments, when the regulator cannot distinguish between risk-increasing and risk-decreasing uses of these instruments. Since the regulator also cannot observe the banker's investment policy (his effort), he faces a double moral hazard problem. The main result is that optimal solvency ratios do not depend on risk exposure, but only on the incentive problem. Chapters two and three deal with liquidity risk. The second chapter compares two sources of liquidity for banks: liquid assets and the interbank market. On the one hand, liquid assets are expensive. On the other hand, transactions between banks take place with asymmetric information, which leads to credit risk in the interbank market. The chapter determines total welfare with and without credit rationing, and concludes that total welfare is higher when there is no rationing. The final chapter summarizes the various theories regarding bank investments in liquid assets. It tests and discusses the predictions of these theories on data for Mexican banks.