Regulation of Large Financial Institutions: Lessons from Corporate Finance Theory

John P. Harding and Stephen Ross ()
Additional contact information
John P. Harding: University of Connecticut

No 2009-29, Working papers from University of Connecticut, Department of Economics

Abstract: Equity capital is the shock absorber for our financial system and the current financial crisis, like a bumpy road for an auto designer, provides a unique opportunity for financial regulators to evaluate the predictions of theory and improve the design of the regulatory system. The purpose of this paper is to apply a simple model of firm capital structure to the current situation and summarize the insights it provides regarding the regulation of large financial institutions in a post-crisis world. The paper begins with a brief summary of the model and uses the results of that model to place the evolution of the current crisis into perspective. The paper concludes with forward-looking observations and suggestions for future regulation.

Keywords: Financial Institutions; Financial Crisis; Capital Regulation; Regulatory Reform; Firm Capital Structure (search for similar items in EconPapers)
JEL-codes: G2 G2 L5 (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-fmk and nep-reg
Date: 2009-09
References: Add references at CitEc
Citations Track citations by RSS feed

Downloads: (external link)
http://www.econ.uconn.edu/working/2009-29.pdf Full text (application/pdf)

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: http://EconPapers.repec.org/RePEc:uct:uconnp:2009-29

Access Statistics for this paper

More papers in Working papers from University of Connecticut, Department of Economics
Address: University of Connecticut 341 Mansfield Road, Unit 1063 Storrs, CT 06269-1063
Contact information at EDIRC.
Series data maintained by Kasey Kniffin ().