An Integrated Framework for Analyzing Multiple Financial Regulations

Goodhart, Charles, Kashyap, K. A., Tsomocos, Dimitrios and Vardoulakis, Alexandros (2013) An Integrated Framework for Analyzing Multiple Financial Regulations. International Journal of Central Banking, 9 (Sup.1). pp. 109-143.

Abstract

In this companion paper to Goodhart et al. (2012), we explore the interactions of various types of financial regulation. We find that regulations that control fire-sale risk are critical for delivering financial stability and improving the welfare of savers and borrowers. We describe the combinations of capital regulations, margin requirements, liquidity regulation, and dynamic provisioning that are most effective in this respect. A policy featuring margin requirements together with countercyclical capital requirements delivers equal or better outcomes for the economy than does an unregulated financial system. But it is easy to produce combinations of regulation that look sensible but, when combined, have adverse effects on the economy.

Item Type: Article
Keywords: Finance
Subject(s): Finance
Date Deposited: 25 Sep 2013 15:42
Last Modified: 27 Feb 2017 10:08
Funders: N/A
URI: http://eureka.sbs.ox.ac.uk/id/eprint/4804

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