Financial Regulation in a Changing World: Lessons from the Recent Crisis
AbstractThe current crisis is leading many to re-think the role of finance and how it snew. This paper reviews what was regarded as the conventional wisdom on financial regulation prior to the 2007 onset of the crisis, briefly recounts some of the main factors behind the events of the 2007-09 years, and then turns to lessons for regulatory reform. At some point in the 1990s, the financial systems of high-income countries seemed to be functioning well and withstood some significant shocks, yet by 2007 much had changed. However, the regulatory structure did not change in response, and in fact eased in such a way as to exacerbate the instability that was subsequently experienced. A key theme is that financial regulation needs to be more dynamic, taking account of financial innovations and how they affect the sector. No such approach to regulation seems possible without greater accountability for regulators and attention to the incentives for those in the sector and for those who regulate it.
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Bibliographic InfoPaper provided by Department of Economics, Williams College in its series Department of Economics Working Papers with number 2009-05.
Length: 31 pages
Date of creation: Sep 2009
Date of revision:
Other versions of this item:
- Gerard Caprio, 2009. "Financial Regulation in a Changing World: Lessons from the Recent Crisis," Center for Development Economics 2009-01, Department of Economics, Williams College.
- Gerard Caprio, Jr. Williams College, 2009. "Financial Regulation in a Changing World: Lessons from the Recent Crisis," The Institute for International Integration Studies Discussion Paper Series iiisdp308, IIIS.
- G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
- G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill
This paper has been announced in the following NEP Reports:
- NEP-ALL-2010-06-18 (All new papers)
- NEP-PKE-2010-06-18 (Post Keynesian Economics)
- NEP-REG-2010-06-18 (Regulation)
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