The Redistributive Effects of Financial Deregulation PDF Download
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Author: Mr.Anton Korinek
Publisher: International Monetary Fund
ISBN: 148430795X
Category : Business & Economics
Languages : en
Pages : 42
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Book Description
Financial regulation is often framed as a question of economic efficiency. This paper, by contrast, puts the distributive implications of financial regulation center stage. We develop a model in which the financial sector benefits from risk-taking by earning greater expected returns. However, risktaking also increases the incidence of large losses that lead to credit crunches and impose negative externalities on the real economy. We describe a Pareto frontier along which different levels of risktaking map into different levels of welfare for the two parties. A regulator has to trade off efficiency in the financial sector, which is aided by deregulation, against efficiency in the real economy, which is aided by tighter regulation and a more stable supply of credit. We also show that financial innovation, asymmetric compensation schemes, concentration in the banking system, and bailout expectations enable or encourage greater risk-taking and allocate greater surplus to the financial sector at the expense of the rest of the economy.
Author: Mr.Anton Korinek
Publisher: International Monetary Fund
ISBN: 148430795X
Category : Business & Economics
Languages : en
Pages : 42
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Book Description
Financial regulation is often framed as a question of economic efficiency. This paper, by contrast, puts the distributive implications of financial regulation center stage. We develop a model in which the financial sector benefits from risk-taking by earning greater expected returns. However, risktaking also increases the incidence of large losses that lead to credit crunches and impose negative externalities on the real economy. We describe a Pareto frontier along which different levels of risktaking map into different levels of welfare for the two parties. A regulator has to trade off efficiency in the financial sector, which is aided by deregulation, against efficiency in the real economy, which is aided by tighter regulation and a more stable supply of credit. We also show that financial innovation, asymmetric compensation schemes, concentration in the banking system, and bailout expectations enable or encourage greater risk-taking and allocate greater surplus to the financial sector at the expense of the rest of the economy.
Author: Xavier Vives
Publisher: Princeton University Press
ISBN: 0691171793
Category : Business & Economics
Languages : en
Pages : 344
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Book Description
A distinguished economist examines competition, regulation, and stability in today's global banks Does too much competition in banking hurt society? What policies can best protect and stabilize banking without stifling it? Institutional responses to such questions have evolved over time, from interventionist regulatory control after the Great Depression to the liberalization policies that started in the United States in the 1970s. The global financial crisis of 2007–2009, which originated from an oversupply of credit, once again raised questions about excessive banking competition and what should be done about it. Competition and Stability in Banking addresses the critical relationships between competition, regulation, and stability, and the implications of coordinating banking regulations with competition policies. Xavier Vives argues that while competition is not responsible for fragility in banking, there are trade-offs between competition and stability. Well-designed regulations would alleviate these trade-offs but not eliminate them, and the specificity of competition in banking should be accounted for. Vives argues that regulation and competition policy should be coordinated, with tighter prudential requirements in more competitive situations, but he also shows that supervisory and competition authorities should stand separate from each other, each pursuing its own objective. Vives reviews the theory and empirics of banking competition, drawing on up-to-date analysis that incorporates the characteristics of modern market-based banking, and he looks at regulation, competition policies, and crisis interventions in Europe and the United States, as well as in emerging economies. Focusing on why banking competition policies are necessary, Competition and Stability in Banking examines regulation's impact on the industry's efficiency and effectiveness.
Author: Bert Scholtens
Publisher:
ISBN: 9783902109156
Category : Finance
Languages : en
Pages : 59
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Book Description
Author: T T Ram Mohan
Publisher: SAGE Publications Pvt. Limited
ISBN:
Category : Business & Economics
Languages : en
Pages : 272
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Book Description
The regulation of financial intermediaries continues to pose significant challenges to policymakers the world over. The task is especially difficult in emerging markets, where various factors—including macroeconomic volatility, relative under-capitalization of banks, the absence of market discipline and lax supervision—combine to render the banking system fragile. As was evident in the East Asian crisis of the late nineties, this can increase manifold the adverse effects of economic shocks. Taking stock of several important issues in the regulation of financial intermediaries in emerging markets, this volume: - Outlines the direction in which financial regulation should evolve in those markets; - Addresses themes related to optimal regulation as well as issues specific to regulation in the Indian context; - Identifies key elements in the best practices regulation in emerging markets; and - Proposes an innovative approach for setting limits to NPAs in banks. Overall, the original essays gathered here provide a comprehensive account of various important issues involved in regulating financial intermediaries and makes valuable and practical suggestions on how to improve regulation in emerging markets. An important feature of the volume is that it brings together both, scholars from academia and finance professionals from various multilateral agencies. As a consequence, it provides a fine balance between cross-country empirical evidence and conceptual contributions.
Author: Mike Buckle
Publisher: Manchester University Press
ISBN: 1526105047
Category : Business & Economics
Languages : en
Pages : 479
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Book Description
The UK financial system, now in its fifth edition, provides an up-to-date discussion of the UK financial system and the changes affecting it. Throughout the world the nature and regulation of financial systems have changed dramatically following the global financial crisis. In this text the necessary underlying theory is introduced and a range of relevant statistics provided in each chapter to supplement the narrative. Coverage includes a critique of the UK financial institutions and markets, as well as regulation emanating both from within the UK and also from supranational bodies such as the Bank for International Settlements and the European Union. The discussion is based on both the underlying theory as well as the operating practices of the institutions and markets. Each supplemented by a comprehensive glossary, the book is subdivided into three main sections: financial institutions; financial markets; and the regulation of banks and other financial institutions. The book will be essential reading to lecturers and undergraduate students enrolled on courses in financial economics and banking.
Author: Charles Albert Eric Goodhart
Publisher: Centre for Economic Policy Research
ISBN:
Category : Business & Economics
Languages : en
Pages : 144
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Book Description
Analytical background -- Nature of systemic risk -- Who should be regulated (by whom) -- Counter-cyclical regulation -- Regulation of liquidity and maturity mismatches -- Other regulatory issues -- The structure of regulation -- Conclusions -- Appendix : the boundary problem in financial regulation -- Discussion and roundtables.
Author: Mr. Ross Levine
Publisher: International Monetary Fund
ISBN: 1513583360
Category : Business & Economics
Languages : en
Pages : 80
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Book Description
Finance and growth emerged as a distinct field of economics during the last three decades as economists integrated the fields of finance and economic growth and then explored the ramifications of the functioning of financial systems on economic growth, income distribution, and poverty. In this paper, I review theoretical and empirical research on the connections between the operation of the financial system and economic growth and inequality. While subject to ample qualifications, the preponderance of evidence suggests that (1) financial development—both the development of banks and stock markets—spurs economic growth and (2) better functioning financial systems foster growth primarily by improving resource allocation and technological change, not by increasing saving rates. Some research also suggests that financial development expands economic opportunities and tightens income distribution, primarily by boosting the incomes of the poor. This work implies that financial development fosters growth by expanding opportunities. Finally, and more tentatively, financial innovation—improvements in the ability of financial systems to ameliorate information and transaction costs—may be necessary for sustaining growth.
Author: Mr. Sunil Sharma
Publisher: International Monetary Fund
ISBN: 1451898169
Category : Business & Economics
Languages : en
Pages : 26
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Book Description
The paper provides an overview of the profound and rapid changes in banking brought about by technology and deregulation, and discusses the hurdles that will have to be negotiated for putting in place the three pillars-capital adequacy rules, supervision, and market discipline-of the bank regulatory framework envisioned by the New Basel Accord (Basel II). It argues that, especially for developing countries, finding the right balance between regulation, supervision, and market discipline is likely to be difficult. Considerable technical expertise as well as political discipline-which can be viewed as a fourth pillar-will be required to implement Basel II.
Author: Mr.Stijn Claessens
Publisher: International Monetary Fund
ISBN: 1475561008
Category : Business & Economics
Languages : en
Pages : 66
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Book Description
This paper reviews the literature on financial crises focusing on three specific aspects. First, what are the main factors explaining financial crises? Since many theories on the sources of financial crises highlight the importance of sharp fluctuations in asset and credit markets, the paper briefly reviews theoretical and empirical studies on developments in these markets around financial crises. Second, what are the major types of financial crises? The paper focuses on the main theoretical and empirical explanations of four types of financial crises—currency crises, sudden stops, debt crises, and banking crises—and presents a survey of the literature that attempts to identify these episodes. Third, what are the real and financial sector implications of crises? The paper briefly reviews the short- and medium-run implications of crises for the real economy and financial sector. It concludes with a summary of the main lessons from the literature and future research directions.
Author: Nancy L. Rose
Publisher: University of Chicago Press
ISBN: 022613816X
Category : Business & Economics
Languages : en
Pages : 619
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Book Description
The past thirty years have witnessed a transformation of government economic intervention in broad segments of industry throughout the world. Many industries historically subject to economic price and entry controls have been largely deregulated, including natural gas, trucking, airlines, and commercial banking. However, recent concerns about market power in restructured electricity markets, airline industry instability amid chronic financial stress, and the challenges created by the repeal of the Glass-Steagall Act, which allowed commercial banks to participate in investment banking, have led to calls for renewed market intervention. Economic Regulation and Its Reform collects research by a group of distinguished scholars who explore these and other issues surrounding government economic intervention. Determining the consequences of such intervention requires a careful assessment of the costs and benefits of imperfect regulation. Moreover, government interventions may take a variety of forms, from relatively nonintrusive performance-based regulations to more aggressive antitrust and competition policies and barriers to entry. This volume introduces the key issues surrounding economic regulation, provides an assessment of the economic effects of regulatory reforms over the past three decades, and examines how these insights bear on some of today’s most significant concerns in regulatory policy.
