Legal Reforms in the Aftermath of the Financial Crisis: Opportunities and Challenges for Emerging Market Economies

Abstract

The financial crises together with the globalization have reinforced the role of international financial standard-setters especially in the rule-making process. The standards and principles issued by these organizations are essentially soft law which is not legally binding, but is implemented voluntarily. Up until now, market mechanisms, however, have performed as enforcement and sanctions for the implementation of these soft law instruments, effects of which go well beyond the traditional enforcement mechanisms. After the recent financial crisis, there have been significant regulatory efforts in some major economies as well as in the EU and at the international level to change the rules of the game in the financial markets. These regulatory reforms may present some opportunities and challenges for emerging market economies. This article analyzes regulatory reforms conducted after the recent financial crisis and their effects on the emerging market economies.