We evaluate the value of loan monitoring systems for a bank controlled by a micro-prudential regulator. We investigate dynamic systems (an information channel that generates information flow about quality) and static systems (where the lender receives a single signal about loan quality). We find that dynamic systems carry a regulatory charge that dominates the benefit of the systems and are therefore unprofitable, whereas static systems have positive value. Specifically, lenders can profitably dismantle their dynamic systems and instead turn to static monitoring systems. The model reveals, therefore, a potential weakness of micro-prudential regulation.

中文翻译：

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微观审慎监管和贷款监控

我们评估了由微观审慎监管机构控制的银行的贷款监控系统的价值。我们研究了动态系统（产生质量信息流的信息渠道）和静态系统（贷方接收到关于贷款质量的单一信号）。我们发现动态系统带有监管费用，该费用支配了系统的利益，因此无利可图，而静态系统具有积极的价值。具体来说，贷方可以有利地拆除他们的动态系统，转而转向静态监控系统。因此，该模型揭示了微观审慎监管的潜在弱点。