Stabilizing Endogenous Instability: Proposals for An Institutionalist Reform of Financial Regulation

Faruk Ülgen

Journal of Economic Issues, 2019, vol. 53, issue 2, 488-495

Abstract: A major and persistent question behind economic theories and related policies is whether the market can self-regulate without any restrictive exogenous intervention or whether regular and binding public regulation is necessary for ensuring the reproduction of the economic system in a sustainable way over time. This article considers this question with regard to the working of financial markets in a liberalized environment. Drawing upon an institutionalist stance, the article shows why the operation of a financialized capitalist economy usually leads to systemic imbalances and crises. The article then suggests an alternative framework for a consistent financial regulation that could prevent market actors from developing short-sighted strategies and gambling on macro stability.

Date: 2019
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Working Paper: Stabilizing endogenous instability. Proposals for an institutionalist reform of financial regulation (2019)
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DOI: 10.1080/00213624.2019.1594542

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