Role of financial regulation and innovation in the financial crisis

Teakdong Kim, Bonwoo Koo and Minsoo Park ()

Journal of Financial Stability, 2013, vol. 9, issue 4, 662-672

Abstract: Using the financial and macroeconomic dataset of 132 countries, this study empirically analyzes the effects of financial regulations and innovations on the global financial crisis. It shows that regulatory measures such as restrictions on bank activities and entry requirements have decreased the likelihood of a banking crisis, while capital regulation and government ownership of banks have increased the likelihood of a currency crisis. Financial innovation has contributed to the banking crisis but contained the currency crisis. This study also shows that judicious implementation of regulatory measures is critical to financial stability because some regulations, if implemented simultaneously, can further aggravate or alleviate a crisis.

Keywords: Financial regulation; Innovation; Government supervision (search for similar items in EconPapers)
JEL-codes: E51 G21 G38 (search for similar items in EconPapers)
Date: 2013
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Citations: View citations in EconPapers (25)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:finsta:v:9:y:2013:i:4:p:662-672

DOI: 10.1016/j.jfs.2012.07.002

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