From liberal finance inconsistency to relevant systemic regulation: an institutionalist analysis

Faruk Ülgen

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Abstract: This article suggests an institutionalist analysis of monetary capitalism and points to the inconsistency of liberal regulation mechanisms. It leans on the characteristics of money in a capitalist economy, often ignored by the consensual wisdom but explicitly studied by institutionalist approaches as major concerns in economic evolution. The article then shows, in a Minskyian vein, the weaknesses and irrelevance of liberal financial structures with regard to the prerequisites of sustainable macroeconomic stability. The main implication is that macro-prudential regulatory reforms must be designed and implemented to tame speculative finance. Therefore, market-based self-regulation mechanisms must be replaced by public regulation processes that could be framed on two rules: preventive-constrained finance and preventive-binding funding.

Keywords: financial liberalization; systemic crisis; institutional analysis; regulation (search for similar items in EconPapers)
Date: 2015-06-09
New Economics Papers: this item is included in nep-hme and nep-pke
Note: View the original document on HAL open archive server: https://shs.hal.science/halshs-01166696v1
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Published in Colloque international Recherche & régulation "La théorie de la régulation à l'épreuve des crises", Association recherche & régulation, Jun 2015, Paris, France

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Persistent link: https://EconPapers.repec.org/RePEc:hal:journl:halshs-01166696

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