The Lacuna Project

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Exhibit 1179

Funding and Incentives of Regulators: Evidence from Banking

Exhibit 1179 ยท Working paper (not peer reviewed as read)

Funding and Incentives of Regulators: Evidence from Banking

Using a novel dataset on fees and regulatory actions, we find that firms that pay higher fees face more lenient regulation, which leads to a buildup of risk.

Uses kinks in the fee schedules of federal bank regulators (OCC and the other federal supervisors) to compare banks just above and below a fee threshold. Banks that pay higher fees face more lenient regulation, take on more risk, and later have more loan defaults and regulatory actions. It is the closest direct test of fee-funded leniency in the literature found. Abstract and introduction read; publication in a journal not confirmed.

Source
Roni Kisin and Asaf Manela, working paper (18 November 2016; SSRN 2527638)
Date
18 November 2016
Quoted from
Abstract, p. 1
Grade
Primary record
Document
https://jhfinance.web.unc.edu/wp-content/uploads/sites/12369/2016/11/2017JH_regulators20160517.pdf
Accessed
2026-11-10
Cited by
Findings citing this exhibit
Note
Standing note: regression kink design, identification depends on kink exogeneity. It compares fee payers with each other inside a fee-funded system, not fee-funded with appropriations-funded regulators. Cite only after checking for a published version; otherwise flag as a working paper.

Cited by

No published finding cites this exhibit.