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From liberal finance inconsistency to relevant systemic regulation : an institutionalist analysis

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  • Faruk Ülgen

    () (CREG - Centre de recherche en économie de Grenoble - UPMF - Université Pierre Mendès France - Grenoble 2 - UGA - Université Grenoble Alpes)

Abstract

This article suggests an institutionalist analysis of monetary capitalism and points to the inconsistency of liberal regulation mechanisms. It leans on the characteristics of money in a capitalist economy, often ignored by the consensual wisdom but explicitly studied by institutionalist approaches as major concerns in economic evolution. The article then shows, in a Minskyian vein, the weaknesses and irrelevance of liberal financial structures with regard to the prerequisites of sustainable macroeconomic stability. The main implication is that macro-prudential regulatory reforms must be designed and implemented to tame speculative finance. Therefore, market-based self-regulation mechanisms must be replaced by public regulation processes that could be framed on two rules: preventive-constrained finance and preventive-binding funding.

Suggested Citation

  • Faruk Ülgen, 2015. "From liberal finance inconsistency to relevant systemic regulation : an institutionalist analysis," Post-Print halshs-01166696, HAL.
  • Handle: RePEc:hal:journl:halshs-01166696
    Note: View the original document on HAL open archive server: https://halshs.archives-ouvertes.fr/halshs-01166696
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    References listed on IDEAS

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    1. Kaminsky, Graciela Laura & Schmukler, Sergio L., 2002. "Short-run pain, long-run gain : the effects of financial liberalization," Policy Research Working Paper Series 2912, The World Bank.
    2. Giancarlo Bertocco, 2013. "On Keynes's Criticism of the Loanable Funds Theory," Review of Political Economy, Taylor & Francis Journals, vol. 25(2), pages 309-326, April.
    3. Rutherford,Malcolm, 2013. "The Institutionalist Movement in American Economics, 1918–1947," Cambridge Books, Cambridge University Press, number 9781107626089, April.
    4. Faruk Ülgen, 2013. "Coordination in economy : an essay on money," Post-Print halshs-00847342, HAL.
    5. Ülgen, Faruk, 2014. "Schumpeterian economic development and financial innovations: a conflicting evolution," Journal of Institutional Economics, Cambridge University Press, vol. 10(02), pages 257-277, June.
    6. Robert Boyer, 2007. "Capitalism Strikes Back: Why and What Consequences for Social sciences?," Post-Print halshs-00754654, HAL.
    7. Andrei Shleifer, 2009. "The Age of Milton Friedman," Journal of Economic Literature, American Economic Association, vol. 47(1), pages 123-135, March.
    8. Amadou N.R. Sy, 2009. "The Systemic Regulation of Credit Rating Agencies and Rated Markets," World Economics, World Economics, 1 Ivory Square, Plantation Wharf, London, United Kingdom, SW11 3UE, vol. 10(4), pages 69-108, October.
    9. Boyer, Robert, 2007. "Capitalism Strikes Back: Why and What Consequences for Social Sciences?," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 1.
    10. Philip Arestis, 2009. "New Consensus Macroeconomics: A Critical Appraisal," Economics Working Paper Archive wp_564, Levy Economics Institute.
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    Keywords

    financial liberalization; systemic crisis; institutional analysis; regulation;

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