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The determinants of regulatory responses to risks from financial innovation: Survey evidence from G20

Author

Listed:
  • Ivan Diaz-Rainey

    (University of Otago)

  • John Ashton

    () (Bangor University)

  • Maz Yap

    (University of Otago)

  • Murat Genc

    (University of Otago)

  • Rosalind Whiting

    (University of Otago)

Abstract

We explore the factors that shape the extent and scope of the response of G20 countries to a Financial Stability Board (FSB) recommendation aimed at mitigating the risks from financial innovation. Using a formal content analysis of the FSBÕs Implementation Monitoring Network Surveys, we develop an index of disclosed strength of regulatory responses. We find that G20 countries have displayed large interpretive differences, little forward planning and have emphasized regulatory capabilities over firm capabilities when addressing the recommendation. Countries with strong central banks, more concentrated regulatory structures and bank-based financial systems responded more robustly, while countries with a large financial sector were marginally associated with a weaker response. The latter suggests that financial sector lobbying has weakened regulatory responses.

Suggested Citation

  • Ivan Diaz-Rainey & John Ashton & Maz Yap & Murat Genc & Rosalind Whiting, 2015. "The determinants of regulatory responses to risks from financial innovation: Survey evidence from G20," Working Papers 15001, Bangor Business School, Prifysgol Bangor University (Cymru / Wales).
  • Handle: RePEc:bng:wpaper:15001
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    File URL: http://www.bangor.ac.uk/business/research/documents/BBSWP-15-01.pdf
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    References listed on IDEAS

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    Keywords

    inancial innovation; financial regulation; Global Financial Crisis; G20; Financial Stability Board;

    JEL classification:

    • G01 - Financial Economics - - General - - - Financial Crises
    • G18 - Financial Economics - - General Financial Markets - - - Government Policy and Regulation
    • G20 - Financial Economics - - Financial Institutions and Services - - - General
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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