This is “The Economics of Financial Regulation”, chapter 11 from the book Finance, Banking, and Money (v. 2.0). For details on it (including licensing), click here.

For more information on the source of this book, or why it is available for free, please see the project's home page. You can browse or download additional books there. To download a .zip file containing this book to use offline, simply click here.

Has this book helped you? Consider passing it on:
Creative Commons supports free culture from music to education. Their licenses helped make this book available to you. helps people like you help teachers fund their classroom projects, from art supplies to books to calculators.

Chapter 11 The Economics of Financial Regulation

Chapter Objectives

By the end of this chapter, students should be able to:

  1. Explain why the government can’t simply legislate bad things out of existence.
  2. Describe the public interest and private interest models of government and explain why they are important.
  3. Explain how asymmetric information interferes with regulatory efforts.
  4. Describe how government regulators exacerbated the Great Depression.
  5. Describe how government regulators made the Savings and Loan Crisis worse.
  6. Assess recent regulatory reforms in the United States and both Basel accords.