Dampening Financial Regulatory Cycles - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Dampening Financial Regulatory Cycles write by Brett McDonnell. This book was released on 2013. Dampening Financial Regulatory Cycles available in PDF, EPUB and Kindle. Financial regulation should be countercyclical, strengthening during speculative booms to contain excessive leverage and loosening following crises so as to not limit credit extension in hard times. And yet, financial regulation in fact tends to be procyclical, strengthening following crises and loosening during booms. This paper considers competing descriptive and normative analyses of that procyclical tendency. All of the models and arguments considered are rooted in a public choice perspective on financial regulation, i.e. rational choice ideas drawn from economics and applied to politics, but with that perspective modified to take account of behavioralist biases in rationality, particularly the availability bias. That bias helps explain the procyclical tendency in financial regulation, as both the public and regulators ignore the threat of financial crises during boom times and become very focused on that threat when crises actually occur. The normal dominance of concentrated interest groups temporarily shifts as public attention turns to financial regulation following a crisis.The models considered here, though differ greatly in their normative conclusions, with some mainly criticizing the deregulation which occurs during booms, others mainly criticizing the regulation which occurs following crises, and yet others critical of the timing of both. The models differ in how they understand the balance of interest groups outside of crises and how likely that balance is to lead to outcomes that reflect the public interest, in how well they think the crisis-related public attention can be channeled to reflect the public interest, and in how they analyze the underlying vulnerability of financial institutions and markets and the intellectual difficulty of regulation. After analyzing these differing models, the paper considers historical evidence to try to choose among them, and then considers various administrative mechanisms which might help dampen the procyclical tendencies of financial regulation. Some of the procedures considered include bicameralism and the committee system in Congress, notice-and-comment rulemaking, hard look judicial review, independent agencies, sunset clauses, mandated agency studies, regulatory “contrarians,” and automatic triggers for various rules.
Regulatory Cycles: Revisiting the Political Economy of Financial Crises
Regulatory Cycles: Revisiting the Political Economy of Financial Crises - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Regulatory Cycles: Revisiting the Political Economy of Financial Crises write by Jihad Dagher. This book was released on 2018-01-15. Regulatory Cycles: Revisiting the Political Economy of Financial Crises available in PDF, EPUB and Kindle. Financial crises are traditionally analyzed as purely economic phenomena. The political economy of financial booms and busts remains both under-emphasized and limited to isolated episodes. This paper examines the political economy of financial policy during ten of the most infamous financial booms and busts since the 18th century, and presents consistent evidence of pro-cyclical regulatory policies by governments. Financial booms, and risk-taking during these episodes, were often amplified by political regulatory stimuli, credit subsidies, and an increasing light-touch approach to financial supervision. The regulatory backlash that ensues from financial crises can only be understood in the context of the deep political ramifications of these crises. Post-crisis regulations do not always survive the following boom. The interplay between politics and financial policy over these cycles deserves further attention. History suggests that politics can be the undoing of macro-prudential regulations.
Financial Regulation at the Crossroads
Financial Regulation at the Crossroads - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Financial Regulation at the Crossroads write by Panagiotis Delimatsis. This book was released on 2011-01-01. Financial Regulation at the Crossroads available in PDF, EPUB and Kindle. This book brings outstanding expertise and provides insightful perspectives from nineteen authors with diverse backgrounds, including officials from international organizations, national regulators, and commercial banking, as well as academics in law, economics, political economy, and finance. The authors not only shed light on the causes of the financial turmoil, but also present thoughtful proposals that contribute to the future policy debate, and discuss opportunities that financial services can offer in funding activities which raise standards of living through initiatives in microfinance, renewable energy, and food distribution. The contributions to this volume tackle several of the thorniest issues of financial regulation in a post-crisis environment, such as: the mechanics of contagion within the financial system and the role of liquidity; moral hazard when large financial institutions are no longer subject to the disciplinary effects of bankruptcy; bank capital requirements; management compensation; design of bank resolution schemes; a function-centric versus institution-centric regulatory approach; subsidization and compatibility of stimulus packages with EU rules on state aid; trade finance and the role of the GATS prudential carve-out; and the role of financial services in promoting human rights or combating climate change.
Regulatory Cycles
Regulatory Cycles - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Regulatory Cycles write by Pooya Almasi. This book was released on 2018. Regulatory Cycles available in PDF, EPUB and Kindle. Financial regulatory policy in the U.S. has been conspicuously pro-cyclical over the last two decades. The 2000s financial boom coincided with a period of financial deregulation and the post-crisis response, a massive scaling up of regulation, was largely implemented during an economic downturn. Many argued that these regulatory waves were excessive. More recently, there are strong signs of a move toward deregulation, at a time of a booming economy and stock market. A closer look at historical financial boom-bust cycles suggests that, in fact, pro-cyclicality in financial regulation is a common and recurring pattern. This paper combines a signaling model of elections with a simple financial regulation model to study how public opinion, financial innovation, and policy-makers incentives shape financial regulation. While changes in voters' perceptions of financial innovation alone can generate a pro-cyclical pattern, we show that this cyclicality can be significantly amplified by politicians' electoral incentives: Both over-regulation and under-regulation can naturally arise in equilibrium, and small changes in public opinion can induce large regulatory shifts.
Mitigating the Deadly Embrace in Financial Cycles
Mitigating the Deadly Embrace in Financial Cycles - read free eBook in online reader or directly download on the web page. Select files or add your book in reader. Download and read online ebook Mitigating the Deadly Embrace in Financial Cycles write by Mr.Jaromir Benes. This book was released on 2016-04-08. Mitigating the Deadly Embrace in Financial Cycles available in PDF, EPUB and Kindle. This paper presents a new version of MAPMOD (Mark II) to study the effectiveness of macroprudential regulations. We extend the original model by explicitly modeling the housing market. We show how household demand for housing, house prices, and bank mortgages are intertwined in what we call a deadly embrace. Without macroprudential policies, this deadly embrace naturally leads to housing boom and bust cycles, which can be very costly for the economy, as shown by the Global Financial Crisis of 2008-09.
