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Comparison Models of the Financial Regulation and Supervision: Advantages and Disadvantages
[Komparace modelů finanční regulace a dozoru: výhody a nevýhody]

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  • Petr Musílek

Abstract

This paper surveys the institutional arrangement of the financial regulation and supervision. Financial markets channel funds from savers to borrowers by expediting the creation and trading of financial instruments. Financial markets consist of numerous smaller financial submarkets that specialize in different types of financial instruments, different types of customers. The future of financial markets can see in the consolidation of the financial institutions. There are four fundamental objectives of financial regulation. The first is to ensure the safety and credibility of the financial institutions. Second, the central bank uses regulation to provide financial stability. The third objective is to provide an efficient and competitive financial system. Finally, financial regulation should protect consumers from abuses by financial institutions. There are many models of the institutional arrangement of the financial regulation and supervision. Financial theory indicates a wide variety of institutional arrangements, suggesting that is no universal ideal model. Model of the regulation and supervision do not guarantee better supervision. More rational structures may help, but, fundamentally, more efficient supervision comes from independent and transparent supervisory body with bettertrained staff and better enforcement, supporting the development of the financial market.

Suggested Citation

  • Petr Musílek, 2006. "Comparison Models of the Financial Regulation and Supervision: Advantages and Disadvantages [Komparace modelů finanční regulace a dozoru: výhody a nevýhody]," Český finanční a účetní časopis, Prague University of Economics and Business, vol. 2006(4), pages 8-22.
    • Handle: RePEc:prg:jnlcfu:v:2006:y:2006:i:4:id:191:p:8-22
    DOI: 10.18267/j.cfuc.191
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    References listed on IDEAS

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    1. George J. Stigler, 1971. "The Theory of Economic Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 3-21, Spring.
    2. Mr. Martin Cihak & Richard Podpiera, 2006. "Is One Watchdog Better Than Three? International Experience with Integrated Financial Sector Supervision," IMF Working Papers 2006/057, International Monetary Fund.
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    More about this item

    Keywords

    Financial Markets; Financial Conglomerates; Financial Regulation and Supervision; Integration of the Supervision; Finanční trhy; Finanční konglomeráty; Finanční regulace a dozor; Integrace dozoru;
    All these keywords.

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G2 - Financial Economics - - Financial Institutions and Services

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