Justifying prudential regulation

Yvonne Kreis, Dietmar Leisen and Jorge Ponce

Chapter 8 in Systemic Risk:History, Measurement and Regulation, 2019, pp 109-119 from World Scientific Publishing Co. Pte. Ltd.

Abstract: In the wake of the GFC of 2008–2009, the terms systemic risk and macro-prudential regulation came to the forefront. Traditional banking regulation had largely disregarded systemic risk by focusing on individual institutions. This lack of a macro-prudential perspective, which is essential to preserve financial stability, constituted the main shortcoming of prudential regulation before the crisis. The traditional, micro-prudential regulation framework also failed by allowing banks to operate at very low levels of capital and to avoid controls through regulatory arbitrage and through soft supervision of key risks…

Keywords: Systemic Risk; Financial Stability; Financial Regulation; Macro-Prudential Regulation; Transmission Channels; Global Financial Crisis; Risk Measurement; Cross-sectional Risk (search for similar items in EconPapers)
JEL-codes: G01 G15 G32 (search for similar items in EconPapers)
Date: 2019
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