IDEAS home Printed from
   My bibliography  Save this book chapter

Misdiagnosis: Incomplete Cures of Financial Regulatory Failures

In: The First Great Financial Crisis of the 21st Century A Retrospective


  • J.R. Barth
  • G. Caprio Jr.
  • R. Levine


Regulatory authorities in countries around the world are attempting to improve financial regulation and supervision. In the aftermath of the global financial crisis (GFC), these attempts involve a three-step process: (1) diagnose what went wrong, (2) design regulatory and supervisory reforms that address these defects, and (3) implement the corrective reforms. We argue that US efforts to enhance financial regulation and supervision have faltered along each of these three dimensions. In particular, we provide numerous examples demonstrating that US authorities misdiagnosed, or perhaps in some cases even willfully disregarded, the causes of the crisis both by overemphasizing factors that did not play decisive roles in causing the onset or severity of the crisis and by underemphasizing factors that did. To increase regulatory accountability and help prevent another financial crisis, we propose the creation of an agency that would have access to all of the information available to regulators and whose sole function would be to publish regular reports on the key systemic risks in the financial system, and assessments of the adequacy of regulators' responses.

Suggested Citation

  • J.R. Barth & G. Caprio Jr. & R. Levine, 2015. "Misdiagnosis: Incomplete Cures of Financial Regulatory Failures," World Scientific Book Chapters, in: George G Kaufman & James R Barth (ed.), The First Great Financial Crisis of the 21st Century A Retrospective, chapter 15, pages 399-431, World Scientific Publishing Co. Pte. Ltd..
  • Handle: RePEc:wsi:wschap:9789814651257_0015

    Download full text from publisher

    File URL:
    Download Restriction: Ebook Access is available upon purchase.

    File URL:
    Download Restriction: Ebook Access is available upon purchase.

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item


    Financial Economics; Banks; Depository Institutions; Micro Finance Institutions; Mortgages; Macroeconomics; Monetary Economics; Dodd-Frank; Financial Crisis; Financial Regulations; Regulatory Framework; Bankers; Systemic Risk; Recession;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • E00 - Macroeconomics and Monetary Economics - - General - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies


    Access and download statistics


    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:wsi:wschap:9789814651257_0015. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Tai Tone Lim). General contact details of provider: .

    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 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.

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

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.