Shaming by Bank Regulators – Methods and Applications
Prof. Ruth Plato-Shinar
In recent years, regulatory shaming has been increasingly used by regulators in many countries, in various fields. This chapter examines whether regulatory shaming should serve as an enforcement tool in the banking field as well.
As is well known, it is of paramount importance to maintain the stability of the banking system and to strengthen public confidence in it. But regulatory shaming may possibly to lead to the opposite result: Loss of public confidence in the "shamed" bank, withdrawal of deposits from the bank, and damage to the bank's economic situation.
Notwithstanding the above, the chapter recommends using regulatory shaming in the banking context under certain limitations, and outlines the recommended practice thereof.