Incentives for Complexity in Financial Regulation

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Sammanfattning

The incentives of those who are involved in making financial regulation work are important in trying to understand the rapid increase in complexity in the financial supervision framework. As argued in this article, the persons that are engaged in developing regulation, and ensuring compliance with existing rules, have a natural bias towards complex solutions. The drawback is that complexity comes with a substantial negative externality that will reduce our welfare unless properly addressed. The article discusses how this negative externality could be internalized so as to pave the way for an equilibrium in which the degree of complexity is closer to its optimal level than in the overly complex framework that presently is under construction.
OriginalspråkEngelska
Referentgranskad vetenskaplig tidskriftThe Journal of Risk Finance
Volym15
Utgåva2
Sidor (från-till)102-109
Antal sidor8
ISSN1526-5943
DOI
StatusPublicerad - 2014
MoE-publikationstypA1 Originalartikel i en vetenskaplig tidskrift

Nyckelord

  • 512 Företagsekonomi
  • financial supervision
  • bank regulation
  • incentives in bureaucracies
  • KOTA2014

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