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

Download or read book A Behavioral Approach to Financial Supervision, Regulation, and Central Banking written by Ashraf Khan and published by International Monetary Fund. This book was released on 2018-08-02 with total page 56 pages. Available in PDF, EPUB and Kindle. Book excerpt: 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.