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This paper describes how behavioral elements are relevant to financial supervision, regulation, and central banking. It focuses on (1) behavioral effects of norms (social, legal, and market); (2) behavior of others (internalization, identification, and compliance); and (3) psychological biases. It stresses that financial supervisors, regulators, and central banks have not yet realized the full potential that these behavioral elements hold. To do so, they need to devise a behavioral approach that includes aspects relating to individual and group behavior. The paper provides case examples of experiments with such an approach, including behavioral supervision. Finally, it highlights areas for further research.

Financial services industry --- Banks and banking, Central. --- Services, Financial --- Service industries --- Banker's banks --- Banks, Central --- Central banking --- Central banks --- Banks and banking --- State supervision. --- Risk management. --- Banks and Banking --- Public Finance --- Industries: Financial Services --- Business and Financial --- Microeconomic Behavior: Underlying Principles --- Intertemporal Consumer Choice --- Life Cycle Models and Saving --- Central Banks and Their Policies --- Financial Institutions and Services: General --- Corporate Finance and Governance: Government Policy and Regulation --- Law and Economics: General (including Data Sources and Description) --- Illegal Behavior and the Enforcement of Law --- Corporate Culture --- Diversity --- Social Responsibility --- Marketing and Advertising: Government Policy and Regulation --- Personnel Economics: Compensation and Compensation Methods and Their Effects --- Cultural Economics --- Economic Sociology --- Economic Anthropology: General --- Cultural Economics: Religion --- Banks --- Depository Institutions --- Micro Finance Institutions --- Mortgages --- Taxation, Subsidies, and Revenue: General --- General Financial Markets: Government Policy and Regulation --- Debt --- Debt Management --- Sovereign Debt --- Banking --- Public finance & taxation --- Financial services law & regulation --- Legal support in revenue administration --- Financial regulation and supervision --- Financial sector --- Government debt management --- Revenue --- Law and legislation --- Debts, Public --- United States