Competition, stability and moral hazard: the tension between financial regulation and State aid control

Joanna Gray and Francesco de Cecco

Chapter 2 in Research Handbook on State Aid in the Banking Sector, 2017, pp 20-53 from Edward Elgar Publishing

Abstract: This chapter explores the challenges presented by the interplay between State aid control and financial regulation. While, during the financial crisis, State aid law and policy demonstrated remarkable openness towards the conceptual toolkit of financial regulation, the uncertain contours of concepts such as systemic risk and moral hazard affected the degree of congruence between theory, policy and practice. What is more, the presence of multiple regulatory objectives tended to present the European Commission with some difficult trade-offs in attempting to pursue stability, the prevention of moral hazard and the preservation of lending to the real economy simultaneously, while attempting to minimize distortions of competition.

Keywords: Economics and Finance; Law - Academic (search for similar items in EconPapers)
Date: 2017
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