On 5-6 September 2012 SUERF held its 30th Colloquium “States, Banks, and the Financing of the Economy” at the University of Zürich, Switzerland. The papers included in this SUERF Study are based on contributions to the Colloquium. All the papers in this publication discuss from different...

Twenty years ago, most banking courses focused on either management or monetary aspects of banking, with no connecting. Since then, a microeconomic theory of banking has developed, mainly through a switch of emphasis from the modeling of risk to the modeling of imperfect information. This...

The paper investigates, in a non-technical fashion, the economic determinants of interchange fees in payment card systems and the potential need for their regulation. Among other things, it demonstrates that the proposal for a cost-based regulation of interchange fees relies on an erroneous,...

The paper offers a roadmap to the current economic thinking concerning interchange fees. After describing the fundamental externalities inherent in payment systems and analysing merchant resistance to interchange fee increases and the associations' determination of this fee, it derives the...

In the 1990s, large insurance companies failed in virtually every major market, prompting a fierce and ongoing debate about how to better protect policyholders. Drawing lessons from the failures of four insurance companies, <i>When Insurers Go Bust</i> dramatically advances this debate by arguing that...

This article summarizes, in a non technical fashion, the main contributions of Jean-Jacques Laffont and Jean Tirole to the analysis of regulation, with a particular emphasis on their practical implications. We show how their idea of using accounting measures of production costs allows improving...

We examine the coexistence of banks and financial markets, studyinga credit market where the qualities of investment projects are notobservable and the investment decisions of entrepreneurs are not contractible...

We examine the coexistence of banks and financial markets, studying a credit market where the qualities of investment projects are not observable and the investment decisions of entrepreneurs are not contractible. Standard banks can alleviate moral-hazard problems by securing a portion of a...

Recent economic theories have investigated the susceptibility of diverse public bureaucratic structures to capture by private industry. In particular, Laffont and Martimort (1999) propose that the separation of regulatory powers will reduce the threat of capture. We analyse investor reaction to...

This Paper studies the design of lawmaking and law enforcement institutions based on the premise that law is inherently incomplete. Under incomplete law, law enforcement by courts may suffer from deterrence failure. As a potential remedy, a regulatory regime is introduced. The major functional...