This paper examines how corporate governance reform of banks relates to systemic risk. Although there has been … the goal of financial stability. The first part of the paper differentiates between kinds of risk that arise from the … kinds of risk that arise from interactions at the systemic level. It highlights why the risk-taking of banks presents, in …

risk management capabilities. These discussions of new approaches to bank examination echo some of the concerns put forward …In recent statements, federal bank regulators from the OCC, FDIC, the Board of Governors of the Federal Reserve and … Federal Reserve Banks have called for a new approach to bank examinations. The essence of the new approach to bank …

mindful of how undercapitalization can create incentives to take on excessive risk. This study proposes a novel framework for … capital regulation that addresses banks' incentives to take on excessive risk and leverage. The framework consists of a … special capital account in addition to a core capital requirement. The special account would accrue to a bank's shareholders …

regular core capital requirement that helps deter excessive risk-taking incentives. The second tier, a novel aspect of our … framework, is a special capital account that limits risk taking but preserves creditors' monitoring incentives …