02127cas a2200253 a 4500 AALejournalIMF014069 230101c9999 xx r poo 0 0eng d 5.00 USD 9781475546088 1018-5941 BD-DhAAL BD-DhAAL Korinek, Anton. The Redistributive Effects of Financial Deregulation / Anton Korinek, Jonathan Kreamer. Washington, D.C. : International Monetary Fund, 2013. 1 online resource (42 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Financial regulation is often framed as a question of economic efficiency. This paper, by contrast, puts the distributive implications of financial regulation center stage. We develop a model in which the financial sector benefits from risk-taking by earning greater expected returns. However, risktaking also increases the incidence of large losses that lead to credit crunches and impose negative externalities on the real economy. We describe a Pareto frontier along which different levels of risktaking map into different levels of welfare for the two parties. A regulator has to trade off efficiency in the financial sector, which is aided by deregulation, against efficiency in the real economy, which is aided by tighter regulation and a more stable supply of credit. We also show that financial innovation, asymmetric compensation schemes, concentration in the banking system, and bailout expectations enable or encourage greater risk-taking and allocate greater surplus to the financial sector at the expense of the rest of the economy. Mode of access: Internet Kreamer, Jonathan. IMF Working Papers; Working Paper ; No. 2013/247 Full text available on IMF http://elibrary.imf.org/view/journals/001/2013/247/001.2013.issue-247-en.xml IMF e-Library