IDEAS home Printed from https://ideas.repec.org/a/ris/jofitr/1299.html
   My bibliography  Save this article

Government regulation and investors’ trust in the securities markets

Author

Listed:

Abstract

Throughout history, the relationship between government regulation, investors' trust in the securities markets, and market prices has been a puzzle. Regulation is costly to issuers. Yet, in a bull market, when raising capital is easy, regulation relaxes and in a bear market, when raising capital is difficult, regulation tightens, often at the request of issuers. This paper suggests that investors view prices as surrogates of a fair and trusted market system. When they lose, they seek greater proof that the system is not ‘rigged.’ Regulation points to such assurances, as well as protection against cutthroat competition by securities distributors. This paper also suggests that after the recent market crash, even though investors seemed to stay in the markets, they did not actually do so. Those who invested in tax deferred plans could not escape the markets without paying a high tax penalty, so they moved within the mutual fund system to money market funds and bonds. Finally, this paper suggests that more than regulation may be needed to resurrect investors' trust today.

Suggested Citation

  • Frankel, Tamar, 2003. "Government regulation and investors’ trust in the securities markets," Journal of Financial Transformation, Capco Institute, vol. 7, pages 47-52.
    • Handle: RePEc:ris:jofitr:1299
    as

    Download full text from publisher

    To our knowledge, this item is not available for download. To find whether it is available, there are three options:
    1. Check below whether another version of this item is available online.
    2. Check on the provider's web page whether it is in fact available.
    3. Perform a search for a similarly titled item that would be available.

    More about this item

    Keywords

    Financial regulation; Securities regulation;

    JEL classification:

    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:ris:jofitr:1299. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Prof. Shahin Shojai (email available below). General contact details of provider: http://www.capco.com/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.