Reputation and regulation

Hans Caspar Crone and Johannes Vetsch
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Hans Caspar Crone: University of Zurich (Ordinarius)
Johannes Vetsch: Research Assistant to Prof. von der Crone, University of Zurich

A chapter in Reputation Capital, 2009, pp 179-195 from Springer

Abstract: Abstract Where information asymmetries are inherent in markets, reputation serves as an enforcement mechanism. Regulation takes the task of informing participants of their counterparties’ standing by sending quality signals to support their reputation, thus allowing for efficient trade. Effective regulation creates expectations, which may force regulators to assume responsibility for the quality signals issued. The extent of both financial and reputational risk to which governments are exposed in financial markets requires strong regulation with clear rules for predictable intervention.

Keywords: Financial Market; Information Asymmetry; Balance Sheet; Market Participant; Quality Signal (search for similar items in EconPapers)
Date: 2009
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Persistent link: https://EconPapers.repec.org/RePEc:spr:sprchp:978-3-642-01630-1_12

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DOI: 10.1007/978-3-642-01630-1_12

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