Abstract The principal-agent theory is an important further-development of Theory of Contracts. This paper rationalized the models of principal-agent theory into two models, model I based on an incentive mechanism while model II on a mixed mechanism of both monitoring and incentive. The principal-agent relationship plays a critical role in the complex firm contracts among commercial banks, we can therefore apply the model of principal-agent into the commercial banks and set up the incentive and monitoring mechanism for them.
|
Received: 24 January 2007
|
|
|
|