Level Playing Fields in International Financial Regulation
AbstractWe analyze the desirability of level playing fields in international financial regulation. In general, level playing fields impose the standards of the weakest regulator upon the best-regulated economies. However, they may be desirable when capital is mobile because they counter a "cherry-picking" effect that lowers the size and efficiency of banks in weaker economies. Hence, while a "laissez faire" policy favors the better-regulated economy, level playing fields are good for weaker regulators. We show that multinational banking mitigates the cherry-picking effect, and reduces the damage that a level playing field causes in the better-regulated economy. Copyright (c) 2009 The American Finance Association.
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Bibliographic InfoArticle provided by American Finance Association in its journal The Journal of Finance.
Volume (Year): 64 (2009)
Issue (Month): 3 (06)
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