Financial Regulatory Reform: Using Models of Cooperation to Evaluate Current Prospects for International Agreement

Paul Masson and John C. Pattison

The Journal of Economic Asymmetries, 2009, vol. 6, issue 3, 119-136

Abstract: We detail several models that help to understand the prospects for cooperation on regulatory reform in the current crisis. A first model, which focuses on parameter uncertainty, shows that gains from coordination increase as the global economy becomes less certain, because coordination allows policymakers to control for the variability of spillover effects from foreign countries. A second model, in which regulation faces a tradeoff between maintaining stability and enhancing the competitive position of the national financial sector, also implies greater incentives to coordination in the current environment, because there has been a common shock to confidence that leads countries to put a greater weight on financial stability. Coordination is defined here as the choice of harmonized regulation of financial institutions. Finally, however, a club model of how agreements are actually reached suggests that the size of the G20 may be a problem (as well as the heterogeneity of its members), because greater numbers decrease the probability of agreement.

Keywords: F34; G18; Financial regulation; Harmonization; International cooperation (search for similar items in EconPapers)
Date: 2009
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/S1703494916300548
Full text for ScienceDirect subscribers only

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:eee:joecas:v:6:y:2009:i:3:p:119-136

DOI: 10.1016/S1703-4949(16)30054-8

Access Statistics for this article

The Journal of Economic Asymmetries is currently edited by A.G. Malliaris

More articles in The Journal of Economic Asymmetries from Elsevier
Bibliographic data for series maintained by Catherine Liu ().