The Regulatory Responses to the Global Financial Crisis

Abstract

We identify current challenges for creating stable, yet efficient financial systems using lessons from recent and past crises. Reforms need to start from three tenets: adopting a system-wide perspective explicitly aimed at addressing market failures; understanding and incorporating into regulations agents' incentives so as to align them better with societies' goals; and acknowledging that risks of crises will always remain, in part due to (unknown) unknowns-be they tipping points, fault lines, or spillovers. Corresponding to these three tenets, specific areas for further reforms are identified. Policy makers need to resist, however, fine-tuning regulations: a "do not harm" approach is often preferable. And as risks will remain, crisis management needs to be made an integral part of system design, not relegated to improvisation after the fact.

Unpacking the Institutional Complexity in Adoption of CSR Practices in Multinational Enterprises

“…First, the RCI does not account for strength of the financial sector regulations. Second, many of these reforms, including the Dodd-Frank Wall Street and Consumer Protection Act of 2010, were introduced after the time of our study, and have been less far reaching than policy experts had hoped (Claessens and Kodres, 2014;V eron, 2012).…”

Business Groups and Corporate Responsibility for the Public Good

“…This opacity hampers efforts to estimate the economic performance of BGs reliably. While several studies report a positive association between BG membership and profitability (Khanna and Palepu 2000;Fisman and Khanna 2004;Claessens and Kodres 2014), these studies at most treat BG membership as a binary covariate, which drops out if one uses a firm fixed-effects specification (Ararat et al 2014). Calculating the total social welfare that includes the value of benefits accrued to all stakeholders is even more difficult.…”

Prudential Policies and Their Impact on Credit in the United States

“…The global financial crisis of [2007][2008][2009] led to a reassessment of the instruments available to limit financial instability (Claessens and Kodres, 2014;Claessens, 2015). Since then, several countries have implemented regulatory reforms aimed at increasing the resilience of banking sectors and at providing policymakers with the tools necessary to limit financial imbalances.…”