The debate over the economic rationale for investor protection regulation: a critical appraisal

Abstract

PurposeThis paper is concerned with the application of economic analysis to law and public policy. Its aim is not to highlight the well‐documented merits of economic analysis but to shed light on some of its flaws and to propose an agenda for future research in the field.Design/methodology/approachThe paper takes as a case study the debate over the economic rationale for investor protection regulation.FindingsThe paper discusses the main economic arguments for and against regulation and explains why arguments of this type are weaker than commonly thought.Originality/valueThe paper reviews the main arguments for and against the economic rationale for investor protection regulation and identifies the economic reasoning entrenched in the arguments of both sides of the debate, spells out its shortcomings and proposes an agenda for future research.

Analysing the reform of the retail financial advice sector in the United Kingdom from an agencement and performativity perspective

“…Observing the problems and shortcomings of an economic approach to the regulation of financial services is not new (see Georgosouli, 2007). However, the significance of this discussion is in drawing attention to the processes by which action and outcomes in the sphere of financial advice have arisen.…”

“…It has also identified potential problems that still require to be overcome (see, for example, Clare, 2013;The Personal Finance Society, 2014). More generally, Georgosouli (2007) notes the limitations of using an economic rationale to develop policy in relation to investor protection, highlighting both the technical and socio-political shortcomings of an economic rationale for regulatory reform.…”

Regulation of Financial Services

“…In general (see, for example, Goodhart et al, 1998;Georgosouli, 2007, Armour et al, 2016, debate tends to centre around three basic objectives, these are: sustaining systemic stability; ensuring firms are financially sound; and ensuring markets work effectively, including protecting consumers from avoidable harm.…”

“…Georgosouli, A. (2007) The debate over the economic rationale for investor protection regulation: a critical appraisal, Journal of FinancialRegulation and Compliance, Vol.…”