Financial regulation: why, how, and where now?

Financial Regulation presents an important restatement of the purposes and objectives of financial regulation. The authors provide details and data on the scale, nature and costs of regulatory problems around the world, and look at what sort of countries and sectors require special attention and policies. Key topics covered include:* the need to recast the form of regulation* incentive structures for financial regulation* proportionality* new techniques for risk management* regulation in emerging countries* crisis management* prospects for financial regulat.

"Published in association with the Bank of England."

Cover; Financial Regulation; Title Page; Copyright Page; Table of Contents; List of figures; List of tables; Notes on authors; Foreword by Eddie George; Acknowledgements; Introduction; 1 The rationale for regulation; A. The scale of the problem; B. The case for external regulation, and the need to make such a case; (i) Protection against monopolies; (ii) Client protection; (iii) Systemic issues; C. Economies of scale in monitoring; D. Why banks are special; E. Do securities firms or insurance companies pose any systemic dangers?; F. Conclusion; Appendix.

2 Bariogs and the need to recast the form of external regulation in developed countries3 Incentive structures for financial regulation; A. Principal-agent relations and contracts between the regulators and the regulated; (i) Adverse selection and moral hazard; (ii) Pay structures, time-inconsistency and internal controls; (iii) Signalling, delegation and incentive contracts; B. Forbearance and pre-commitment on closure; (i) How serious is regulatory forbearance?; (ii) Accountability; (iii) Prompt corrective action provisions; (iv) Size and 'too big to fail'

(V) Idiosyncratic v. systemic shocks and incentives for herdingC. Conclu…