Principles of the Optimal Government Regulation in the Financial Market

Kristaps Freimanis () and Maija Šenfelde ()
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Kristaps Freimanis: Riga Technical University
Maija Šenfelde: Riga Technical University

Chapter Chapter 5 in New Challenges for the Banking Industry, 2023, pp 99-115 from Palgrave Macmillan

Abstract: Abstract Theoretical concept of regulation is based on the existence of market failures, which are defined by the deviation from the perfect competition model. In the chapter, the case of financial market with emphasis on the traditional banking market has been reviewed. In the article, authors have disclosed the review of literature of the principles of regulation. Literature review covers the period from 1998 till 2022, reviewing 185 sources, from which 30 sources were selected for analysis. In this review, we have identified 12 principles of the optimal government regulation, including recently highlighted topic of climate-related risks. 68% of sources refer to the following 5 principles: (a) Cost–benefit balanced, (b) Risk based, (c) Consistency and competitive neutrality, (d) High quality, transparent decision-making, and enforcement, and (e) International coordination, convergence, and implementation in policy and rulemaking.

Keywords: Banking market; Government intervention; Optimal level of regulation; Systemic risk (search for similar items in EconPapers)
Date: 2023
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Persistent link: https://EconPapers.repec.org/RePEc:pal:pmschp:978-3-031-32931-9_5

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DOI: 10.1007/978-3-031-32931-9_5

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