Regulating Financial Markets A Critique and Some Proposals

by Benston, George J.

• ISBN13: 9780844741246
• ISBN10: 0844741248
• Format: Paperback
• Copyright: 1999-01-01
• Publisher: Aei Press

Summary

This study explains why financial services have for centuries been regulated to a greater extent than are most products that do not directly affect people's health or safety.

Table of Contents

Preface	vii
Introduction and Overview	1	(14)
Governmental Regulation of Financial Services	2	(4)
Overview of the Balance of the Study	6	(9)
Reasons for Regulating Financial Services	15	(57)
Benefits to Government from Regulation---Seigniorage	16	(5)
Concern about Possible Negative Externalities	21	(1)
Imposing Costs on Noncontracting Third Parties	22	(2)
Financial-Institution Failures and Runs on Other Solvent Institutions	24	(4)
Failures and the Collapse of Parts of the Financial System	28	(2)
Failures and the Costs to Taxpayers and Prudently Run Banks	30	(4)
Less-than-Optimal Use of Financial Services	34	(3)
Financial-Services Providers and Poorly Served Consumers	37	(1)
Conclusions on Negative Externalities	38	(2)
Consumer Protection	40	(13)
Interests of Popularly Elected Officials to ``Solve'' Apparent Problems	53	(6)
Benefits to the Regulated Financial Institutions	59	(13)
Intended and Unintended Costs of Regulation	72	(12)
Intended Costs	72	(2)
Unintended Costs	74	(9)
Conclusions on the Cost of Regulation	83	(1)
Optimal Regulation of Financial Services	84	(23)
Deposits and Depository Institutions	85	(9)
Government-Mandated Third-Party Liability Insurance, Life Insurance, and Annuities	94	(4)
International Harmonization of National Regulations and Cooperation among Regulators	98	(4)
Consumer Protection from Fraud, Unfair Dealing, and Invidious Discrimination	102	(3)
Conclusions	105	(2)
Notes	107	(8)
References	115	(8)
Index	123	(14)
About the Author	137