REGULATORY RESPONSES TO THE FINANCIAL SECTOR CRISIS

This article uses a simple accounting framework to provide a basis for interpreting the plethora of regulatory responses to the global financial crisis. The various types of responses are outlined and criteria suggested by which their merits might be assessed. Drawing on a large number of official reports and inquiries, current and potential areas of regulatory reform are identified and analysed. It is argued that the problems of increased size, market concentration and interdependencies in the financial sector mean that caveat emptor is not a viable policy option in relation to large financial institutions. Consequently, a major policy challenge lies in finding a regulatory structure that generates financial stability, adequate competition and value-adding financial innovation.