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Problems with quality in financial distribution: a state or market failure?

Author

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  • Jiří Šindelář
  • Michal Erben

Abstract

The paper deals with negative impacts of chosen regulatory attributes (regulatory arbitrage, relative over and under regulation) on economic agents’ behaviour in the financial distribution area. Using three case studies from the Czech market (life insurance, corporate bonds and pension savings), we demonstrate situations, when state regulatory incursions caused substantial deformations of the target market and the subsequent detriment of final customers. Although partial market failures cannot be ruled out, our observations show that in particular, the regulatory arbitrage between individual sub-sectors of the financial market is a potent stimulator of distribution momentum, which, in turn, can lead to future systemic risks.

Suggested Citation

  • Jiří Šindelář & Michal Erben, 2017. "Problems with quality in financial distribution: a state or market failure?," Český finanční a účetní časopis, University of Economics, Prague, vol. 2017(3), pages 5-17.
  • Handle: RePEc:prg:jnlcfu:v:2017:y:2017:i:3:id:498:p:5-17
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    References listed on IDEAS

    as
    1. Joel F. Houston & Chen Lin & Yue Ma, 2012. "Regulatory Arbitrage and International Bank Flows," Journal of Finance, American Finance Association, vol. 67(5), pages 1845-1895, October.
    2. Diacon, Stephen & Hasseldine, John, 2007. "Framing effects and risk perception: The effect of prior performance presentation format on investment fund choice," Journal of Economic Psychology, Elsevier, vol. 28(1), pages 31-52, January.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Financial market regulation; Life Insurance; Corporate bonds; Pension savings; Systemic risk; Regulace finančního trhu; Životní pojištění; Korporátní dluhopisy; Penzijní spoření; Systémové rizik;

    JEL classification:

    • D04 - Microeconomics - - General - - - Microeconomic Policy: Formulation; Implementation; Evaluation
    • D47 - Microeconomics - - Market Structure, Pricing, and Design - - - Market Design
    • G2 - Financial Economics - - Financial Institutions and Services
    • K22 - Law and Economics - - Regulation and Business Law - - - Business and Securities Law

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