Incentive Audits: A New Approach to Financial Regulation

M. Čihák, A. Demirgüç-Kunt, R.B. Johnston | The World Bank

This paper proposes a pragmatic approach to re-orienting financial regulation to have at its core the objective of addressing incentives on an ongoing basis. Specifically, the paper proposes "incentive audits" as a tool that could help in identifying incentive misalignments in the financial sector. The paper illustrates how such audits could be implemented in practice, and what the implications would be for the design of policies and frameworks to mitigate systemic risks.

Legal & Regulatory Environment, Accounting & Auditing
Year of publication:
File size:
537340 bytes