Financial regulation

Abstract

During the 19802, dramatic changes took place worldwide in the area of financial regulation. Governments in both developed and developing countries implemented extensive regulatory reform, relaxing or removing those economic and structural regulations that inhibit innovation and stifle competition. In their place, they introduced or strengthened prudential, organizational, and protective controls intended to promote efficiency while also safeguarding stability and fairness in the financial system. This book analyzes the theoretical and practical arguments for and against different types of regulations, and reviews postwar experience with regulatory reform. Detailed case studies discuss the experiences of Japan, Indonesia, Chile, Malaysia, Norway, the US, Germany, the UK, Canada and Italy. The book also discusses extensively a number of important policy issues: the pace and sequence of financial liberalization; the handling of banking crises; the modes of bank restructuring; the scope of prudential regulation and supervision; the role of deposit insurance; the case for and against universal banking and financial conglomerates; and the use of holding company structures. This book is intended for policymakers, advisers, and researchers who seek to understand the advantages and disadvantages of different types of financial regulations and to determine the appropriate dimensions, pace, and sequence of regulatory reform in the financial sector.