A Behavioral Approach to Financial Supervision, Regulation, and Central Banking

August 2, 2018

Preview Citation

Format: Chicago

Ashraf Khan. A Behavioral Approach to Financial Supervision, Regulation, and Central Banking, (USA: International Monetary Fund, 2018) accessed November 21, 2024

Disclaimer: IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.

Summary

This paper describes how behavioral elements are relevant to financial supervision, regulation, and central banking. It focuses on (1) behavioral effects of norms (social, legal, and market); (2) behavior of others (internalization, identification, and compliance); and (3) psychological biases. It stresses that financial supervisors, regulators, and central banks have not yet realized the full potential that these behavioral elements hold. To do so, they need to devise a behavioral approach that includes aspects relating to individual and group behavior. The paper provides case examples of experiments with such an approach, including behavioral supervision. Finally, it highlights areas for further research.

Subject: Banking, Financial regulation and supervision, Financial sector, Government debt management, Legal support in revenue administration

Keywords: Corporate governance, Crowding out, Market norm, Risk management, Social science, WP

Publication Details

Pages:

56
Volume:

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DOI:

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Issue:

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Series:

Working Paper No. 2018/178
Stock No:

WPIEA2018178
ISBN:

9781484372289
ISSN:

1018-5941

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