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An integrated framework for analyzing multiple financial regulations

Goodhart, Charles and Kashyap, Anil K. and Tsomocos, Dimitrios P. and Vardoulakis, Alexandros P. (2013) An integrated framework for analyzing multiple financial regulations. International Journal of Central Banking, 9 (Supp.1). pp. 109-144. ISSN 1815-4654

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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 counter cyclical 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
Official URL: http://www.ijcb.org/
Additional Information: © 2013 The Association of the International Journal of Central Banking
Subjects: H Social Sciences > HG Finance
Sets: Research centres and groups > Financial Markets Group (FMG)
Date Deposited: 20 Feb 2013 16:22
Last Modified: 28 Mar 2017 14:32
URI: http://eprints.lse.ac.uk/id/eprint/48783

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