Regulation and self-regulation in banking: in search of optimum
AbstractThe paper explores the nature of regulation in the banking sector and considers the following regulatory continuum: from free banking through self-regulation to supervisory regulation. Because the state’s responsibility for the functioning of the financial system requires the state to enact laws forming the system’s legal framework, laissez-faireism in banking is not possible. Nevertheless, the modern regulatory dialectics – liberalisation and deregulation alternating with re-regulation – brings up the issue of possible advantages and disadvantages (benefits and costs) of the two approaches for the economy. Overregulation is costly, but lenient regulations may undermine economic stability. This means that a subtle balance between under-regulation and overregulation in the banking sector should be sought. There is a need for well-balanced proportions of legal standards and voluntary, negotiated rules. As perfect regulations do not exist, an effective and generally accepted legal framework must be created for the banking system, strengthened by the imperatives of ethics.
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Bibliographic InfoArticle provided by National Bank of Poland, Economic Institute in its journal Bank i Kredyt.
Volume (Year): 44 (2013)
Issue (Month): 2 ()
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More information through EDIRC
banks; regulations; self-regulation; financial system safety;
Find related papers by JEL classification:
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- G19 - Financial Economics - - General Financial Markets - - - Other
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
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