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Rethinking the Role of Regulation in the Aftermath of the Global Financial Crisis: The Case of the UK


  • David Slattery

    () (School of Management, Cranfield University, UK)

  • Joseph G. Nellis

    () (School of Management, Cranfield University, UK)


Following the global financial crisis, many countries have embarked on fundamental reviews of their regulatory systems in an attempt to identify the causes of the near collapse in financial systems and to pave the way for a new approach to regulation. The focus of this paper concerns the intellectual assumptions on which previous regulatory approaches have largely been built, both in the UK and in a number of other countries. We examine the analysis provided by the UK’s Turner Review (2009) which follows the “market failure†approach to regulation and we contrast this with the alternative “state failure†approach. Both approaches only offer partial and polarised views into the causes of the crisis. We offer a synthesis and argue that a new conceptual approach to the management of financial markets is required. The essence of this new approach is the recognition that the state and regulation are not external to the market. While this paper largely relates to the UK, it provides potentially important lessons for many other countries.

Suggested Citation

  • David Slattery & Joseph G. Nellis, 2011. "Rethinking the Role of Regulation in the Aftermath of the Global Financial Crisis: The Case of the UK," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 58(3), pages 407-423, September.
  • Handle: RePEc:voj:journl:v:58:y:2011:i:3:p:407-423

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    References listed on IDEAS

    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. Kosta Josifidis & Alpar Lošonc & Novica Supić, 2010. "Neoliberalism: Befall or Respite?," Panoeconomicus, Savez ekonomista Vojvodine, Novi Sad, Serbia, vol. 57(1), pages 101-117, March.
    3. Thomas I. Palley, 2007. "Financialization: What It Is and Why It Matters," Working Papers wp153, Political Economy Research Institute, University of Massachusetts at Amherst.
    4. Frankfurter, George M. & McGoun, Elton G., 1999. "Ideology and the theory of financial economics," Journal of Economic Behavior & Organization, Elsevier, vol. 39(2), pages 159-177, June.
    5. Richard A. Posner, 1971. "Taxation by Regulation," Bell Journal of Economics, The RAND Corporation, vol. 2(1), pages 22-50, Spring.
    6. Libecap, Gary D., 1994. "Contrived Competition: Regulation and Deregulation in America. By Richard H. K. Vietor. Cambridge, MA: The Belknap Press of Harvard University Press, 1994. Pp. 439. $35.00," The Journal of Economic History, Cambridge University Press, vol. 54(04), pages 960-962, December.
    7. Jones, David, 2000. "Emerging problems with the Basel Capital Accord: Regulatory capital arbitrage and related issues," Journal of Banking & Finance, Elsevier, vol. 24(1-2), pages 35-58, January.
    8. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    9. Leontief, Wassily, 1971. "Theoretical Assumptions and Nonobserved Facts," American Economic Review, American Economic Association, vol. 61(1), pages 1-7, March.
    10. Gary S. Becker, 1983. "A Theory of Competition Among Pressure Groups for Political Influence," The Quarterly Journal of Economics, Oxford University Press, vol. 98(3), pages 371-400.
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    Cited by:

    1. David Slattery & Joseph Nellis & Kosta Josifidis & Alpar Losonc, 2013. "Neoclassical economics: science or neoliberal ideology?," European Journal of Economics and Economic Policies: Intervention, Edward Elgar Publishing, vol. 10(3), pages 313—326-3, December.

    More about this item


    Regulation; Global financial crisis; Market failure; State failures;

    JEL classification:

    • E6 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook
    • G1 - Financial Economics - - General Financial Markets
    • H8 - Public Economics - - Miscellaneous Issues


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