The determinants of regulatory responses to risks from financial innovation: Survey evidence from G20

Ivan Diaz-Rainey, John Ashton (), Maz Yap, Murat Genc and Rosalind Whiting
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Ivan Diaz-Rainey: University of Otago
Maz Yap: University of Otago
Rosalind Whiting: University of Otago

No 15001, Working Papers from Bangor Business School, Prifysgol Bangor University (Cymru / Wales)

Abstract: We explore the factors that shape the extent and scope of the response of G20 countries to a Financial Stability Board (FSB) recommendation aimed at mitigating the risks from financial innovation. Using a formal content analysis of the FSBÕs Implementation Monitoring Network Surveys, we develop an index of disclosed strength of regulatory responses. We find that G20 countries have displayed large interpretive differences, little forward planning and have emphasized regulatory capabilities over firm capabilities when addressing the recommendation. Countries with strong central banks, more concentrated regulatory structures and bank-based financial systems responded more robustly, while countries with a large financial sector were marginally associated with a weaker response. The latter suggests that financial sector lobbying has weakened regulatory responses.

Keywords: inancial innovation; financial regulation; Global Financial Crisis; G20; Financial Stability Board (search for similar items in EconPapers)
JEL-codes: G01 G18 G20 G28 (search for similar items in EconPapers)
Pages: 21 pages
Date: 2015-01
New Economics Papers: this item is included in nep-cba and nep-ino
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