At the root of recurring bank crises are deeply-implanted incentives for banks and their executives to take systemically excessive risk. Since the 2008-2009 financial crisis, regulators have sought to strengthen the financial system by requiring more capital (which can absorb losses from risk-taking) and less risk-taking, principally via command-and-control rules. Yet bankers' baseline incentives for system-degrading risk-taking remain intact.
Mark J. Roe & Michael Troge,
Containing Systemic Risk by Taxing Banks Properly,
Yale J. on Reg.
Available at: https://digitalcommons.law.yale.edu/yjreg/vol35/iss1/4