How special are they? - Targeting systemic risk by regulating shadow banking : (October 5, 2014)

This essay argues that at least some of the financial stability concerns associated with shadow banking can be addressed by an approach to financial regulation that imports its functional foundations more vigorously into
This essay argues that at least some of the financial stability concerns associated with shadow banking can be addressed by an approach to financial regulation that imports its functional foundations more vigorously into the interpretation and implementation of existing rules. It shows that the general policy goals of prudential banking regulation remain constant over time despite dramatic transformations in the financial and technological landscape. Moreover, these overarching policy goals also legitimize intervention in the shadow banking sector. On these grounds, this essay encourages a more normative construction of available rules that potentially limits both the scope for regulatory arbitrage and the need for ever more rapid updates and a constant increase in the complexity of the regulatory framework. By tying the regulatory treatment of financial innovation closely to existing prudential rules and their underlying policy rationales, the proposed approach potentially ends the socially wasteful race between hare and tortoise that signifies the relation between regulators and a highly dynamic industry. In doing so it does not generally hamper market participants’ efficient discoveries where disintermediation proves socially beneficial. Instead, it only weeds-out rent-seeking circumventions of existing rules and standards.
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Metadaten
Author:Tobias Tröger
URN:urn:nbn:de:hebis:30:3-350018
Parent Title (German):Working paper series / Institute for Monetary and Financial Stability ; 83
Series (Serial Number):Working Paper Series : Institute for Monetary and Financial Stability (83)
Document Type:Working Paper
Language:English
Date of Publication (online):2014/10/15
Date of first Publication:2014/10/15
Publishing Institution:Universitätsbibliothek Johann Christian Senckenberg
Release Date:2014/10/21
Tag:prudential supervision; regulatory arbitrage; shadow banking
Pagenumber:24
HeBIS PPN:349613109
Institutes:Rechtswissenschaft
Wirtschaftswissenschaften
Institute for Monetary and Financial Stability (IMFS)
Center for Financial Studies (CFS)
Sustainable Architecture for Finance in Europe (SAFE)
Dewey Decimal Classification:330 Wirtschaft
JEL-Classification:G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
G28 Government Policy and Regulation
H77 Intergovernmental Relations; Federalism; Secession
K22 Corporation and Securities Law
K23 Regulated Industries and Administrative Law
L22 Firm Organization and Market Structure
Sammlungen:Universitätspublikationen
Licence (German):License Logo Veröffentlichungsvertrag für Publikationen

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