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The Interplay between Regulations and Financial Stability

Allen, Franklin; Gu, Xian

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Authors

Franklin Allen

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Dr Xian Gu xian.gu@durham.ac.uk
Associate Professor in Finance



Abstract

The crisis demonstrated that microprudential regulation focusing on the risks taken by individual banks is not sufficient to prevent crises. This is because it ignores systemic risk. Six types of systemic risk are identified, namely: (i) panics – banking crises due to multiple equilibria; (ii) banking crises due to asset price falls; (iii) contagion; (iv) financial architecture; (v) foreign exchange mismatches in the banking system; (vi) behavioral effects from Knightian uncertainty. We focus on the first three as they are arguably the main causes of the 2007–9 crisis and consider regulatory and other policies to counteract them.

Citation

Allen, F., & Gu, X. (2018). The Interplay between Regulations and Financial Stability. Journal of Financial Services Research, 53(2-3), 233-248. https://doi.org/10.1007/s10693-018-0296-7

Journal Article Type Article
Acceptance Date Mar 20, 2018
Online Publication Date Apr 18, 2018
Publication Date 2018-06
Deposit Date Aug 4, 2020
Publicly Available Date Aug 4, 2020
Journal Journal of Financial Services Research
Print ISSN 0920-8550
Electronic ISSN 1573-0735
Publisher Springer
Peer Reviewed Peer Reviewed
Volume 53
Issue 2-3
Pages 233-248
DOI https://doi.org/10.1007/s10693-018-0296-7
Public URL https://durham-repository.worktribe.com/output/1264773
Related Public URLs https://spiral.imperial.ac.uk/handle/10044/1/57848

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Publisher Licence URL
http://creativecommons.org/licenses/by/4.0/

Copyright Statement
This article is distributed under the terms of the Creative Commons Attribution 4.0 International License (http://creativecommons.org/licenses/by/4.0/), which permits unrestricted use, distribution, and reproduction in any medium, provided you give appropriate credit to the original author(s) and the source, provide a link to the Creative Commons license, and indicate if changes were made.





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