Regulatory structure for financial stability and development
To understand the appropriate regulatory response to the crisis, we start from the basic market failures that justify regulation in financial markets. Neglecting these first principles contributed to the market and regulatory failures. Regulation that induces better outcomes through creating correct incentives for market participants is the key to reform. A combination of micro and macro prudential regulation can moderate procyclicality, information failure and market power. Better national and global coordination of regulators is also required. Global prudential standards can push financial firms to choose safe over risky strategies, by removing the moral hazard from bailouts, and assuring that a competitor is not adopting risky strategies either. Universal application of basic standards prevents regulatory arbitrage. A pure principles-based regulatory approach maybe too flexible, but principle-based rules retain sufficient operational flexibility and universality. This analysis is applied to regulation in emerging market economies (EMEs), where development of financial markets is a major regulatory goal along with stability.
|Date of creation:||Feb 2010|
|Date of revision:|
|Contact details of provider:|| Postal: Gen. A. K. Vaidya Marg, Goregaon (E), Mumbai 400065|
Phone: (022) 840 0919/20/21
Fax: (022) 840 2752/2026
Web page: http://www.igidr.ac.in
More information through EDIRC
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Goyal, Ashima, 2002. "Reform proposals from developing Asia: finding a win-win strategy," MPRA Paper 30527, University Library of Munich, Germany.
- M. Ramesh & Michael Howlett (ed.), 2006. "Deregulation and its Discontents," Books, Edward Elgar Publishing, number 4210, April.
- Edward L. Glaeser & Andrei Shleifer, 2001.
"The Rise of the Regulatory State,"
Harvard Institute of Economic Research Working Papers
1934, Harvard - Institute of Economic Research.
- Rafael La Porta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, 1998.
"Law and Finance,"
Journal of Political Economy,
University of Chicago Press, vol. 106(6), pages 1113-1155, December.
- Rafael LaPorta & Florencio Lopez de-Silanes & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," Harvard Institute of Economic Research Working Papers 1768, Harvard - Institute of Economic Research.
- Rafael LaPorta & Florencio Lopez-de-Silanes & Andrei Shleifer & Robert W. Vishny, . "Law and Finance," Working Paper 19451, Harvard University OpenScholar.
- Rafael La Porta & Florencio Lopez-de-Silane & Andrei Shleifer & Robert W. Vishny, 1996. "Law and Finance," NBER Working Papers 5661, National Bureau of Economic Research, Inc.
- La Porta, Rafael & Lopez-de-Silanes, Florencio & Shleifer, Andrei & Vishny, Robert W., 1998. "Law and Finance," Scholarly Articles 3451310, Harvard University Department of Economics.
- Laffont,Jean-Jacques, 2005.
"Regulation and Development,"
Cambridge University Press, number 9780521549486, October.
- Ashima Goyal, 2006. "Regulation and Deregulation of the Stock Market in India," Chapters, in: Deregulation and its Discontents, chapter 9 Edward Elgar Publishing.
- Richard A. Posner, 1974.
"Theories of Economic Regulation,"
Bell Journal of Economics,
The RAND Corporation, vol. 5(2), pages 335-358, Autumn.
When requesting a correction, please mention this item's handle: RePEc:ind:igiwpp:2010-002. 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: (Shamprasad M. Pujar)
If references are entirely missing, you can add them using this form.