Record Details

Regulatory Factors that Contributed to the Global Financial Crisis

Asia-Pacific Social Science Review

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Title Regulatory Factors that Contributed to the Global Financial Crisis
 
Creator Espenilla, Nestor A; Bangko Sentral ng Pilipinas
 
Subject Finance; Social Science
global financial crisis, regulation, regulatory powers, monetary policy, central bank, financial system, banks
 
Description The source of the global financial crisis of 2008 may be viewed from two ideological perspectives: regulatory failure in the credit risk transfer (CRT) market; and monetary laxity, pointing to the inherent nature of financial regulation. This paper is an exposition of the regulatory factors that contributed to the global financial crisis by highlighting the weaknesses in the CRT market believed to have catalyzed the present economic slowdown. These factors include active involvement of unregulated entities in the market; divergent regulatory treatment of CRT transactions across different financial institutions; insufficient supervisory data on CRT transactions; and insufficient capital requirement for CRT transactions. The paper addresses the presence of monetary laxity evidenced by the procyclical nature of some policies that reinforced the market downturn. It looks into each factor closely before concluding that regulations are by no means, an easy task. They have to constantly strike a balance between allowing innovations for the development of the financial markets to support further development in the real economy and ensuring a stable financial system. The bottom line is for regulators to caution themselves against over-regulation that would inhibit innovation which is a tempting proposition amidst all these issues on regulatory failure. Keywords: global financial crisis, regulation, regulatory powers, monetary policy, central bank, financial system, banks
 
Publisher De La Salle University
 
Contributor —
 
Date 2009-06-19
 
Type Peer-reviewed Article
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Format application/pdf
 
Identifier http://www.philjol.info/philjol/index.php/APSSR/article/view/1057
10.3860/apssr.v9i1.1057
 
Source Asia-Pacific Social Science Review; Vol 9, No 1 (2009): Papers from the Sixth Secretary Alfonso Yuchengco Policy Conference; 35-40
 
Language en
 
Coverage Philippines; Global
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