The redistributive effects of financial deregulation

Anton Korinek and Jonathan Kreamer

Journal of Monetary Economics, 2014, vol. 68, issue S, S55-S67

Abstract: Financial regulation is often framed as a question of economic efficiency. This paper, by contrast, puts the distributive implications of financial regulation at center stage. We develop a model in which the financial sector benefits from financial risk-taking by earning greater expected returns. However, risk-taking also increases the incidence of large losses that lead to credit crunches and impose negative externalities on the real economy. A regulator has to trade off efficiency in the financial sector, which is aided by deregulation, against efficiency in the real economy, which is aided by tighter regulation and a more stable supply of credit.

Keywords: Financial regulation; Distributive conflict; Rent extraction; Growth of the financial sector (search for similar items in EconPapers)
Date: 2014
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Citations: View citations in EconPapers (21)

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Related works:
Working Paper: The Redistributive Effects of Financial Deregulation (2013)
Working Paper: The Redistributive Effects of Financial Deregulation (2013)
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Persistent link: https://EconPapers.repec.org/RePEc:eee:moneco:v:68:y:2014:i:s:p:s55-s67

DOI: 10.1016/j.jmoneco.2014.08.007

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