Financial paradigms
What market and regulatory issues led to the subprime crisis? How should prudential regulation be fixed? The answers depend on the interpretative lenses or 'paradigms' through which one sees finance. The agency paradigm, which has dominat...
| Main Authors: | , |
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| Format: | Brief |
| Language: | English |
| Published: |
World Bank, Washington, DC
2012
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| Subjects: | |
| Online Access: | http://documents.worldbank.org/curated/en/2009/11/11800010/financial-paradigms http://hdl.handle.net/10986/10226 |
| Summary: | What market and regulatory issues led to
the subprime crisis? How should prudential regulation be
fixed? The answers depend on the interpretative lenses or
'paradigms' through which one sees finance. The
agency paradigm, which has dominated recent regulatory
policy, seems to be influencing much of the emerging reform
agenda. But collective welfare failures particularly
externalities and collective cognition failures particularly
mood swings were at least as important in driving the
crisis. All three paradigms should therefore be integrated
into a more balanced policy agenda. But doing so will be
difficult because they often have inconsistent policy implications. |
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