Asset bubbles, financial sector, and current challenges to regulatory framework

Akaki Tsomaia ()
Additional contact information
Akaki Tsomaia: The University of Georgia

International Economics and Economic Policy, 2021, vol. 18, issue 4, No 11, 925 pages

Abstract: Abstract The manuscript examines the causes of asset price bubbles and financial crises. It studies the current challenges facing the regulatory framework of the financial system. We argue that the current model of regulations can not stop the emergence of either asset bubbles or financial crises in the future. In a causal relationship, the current system of regulations tends to deal with effects, that is the liquidity shortage during the recessions, and not with the causes which can be referred to as distorted financial intermediation. In fact, regulations seek to cure symptoms rather than disease. The rules look like antibiotics, against which the infection acquires immunity. We intuitively propose the idea/concept of how to modify the current system and believe that this concept should be taken into account when developing an effective regulatory framework for the financial system.

Keywords: Asset Bubbles; Asset Pricing; Money Supply; Credit; Money; Monetary Policy; Central Banks and Their Policies; Government Policy and Regulation; Financial Institutions and Services; Economic History of Financial Crisis (search for similar items in EconPapers)
JEL-codes: E51 E52 E58 G12 G18 G2 N2 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://link.springer.com/10.1007/s10368-021-00508-3 Abstract (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:kap:iecepo:v:18:y:2021:i:4:d:10.1007_s10368-021-00508-3

Ordering information: This journal article can be ordered from
http://www.springer. ... cs/journal/10368/PS2

DOI: 10.1007/s10368-021-00508-3

Access Statistics for this article

International Economics and Economic Policy is currently edited by Paul J.J. Welfens, Holger C. Wolf, Christian Pierdzioch and Christian Richter

More articles in International Economics and Economic Policy from Springer
Bibliographic data for series maintained by Sonal Shukla () and Springer Nature Abstracting and Indexing ().