Market Efficiency and Government Intervention Revisited: What Dorecent Evidence Tell Us?

Ajefu, Joseph B.; Barde, Faith

doi:10.15640/jibe.v3n1a3

Cited by 9 publications

(6 citation statements)

References 5 publications

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“…Role of the government in this respect was emphasized already in Keynes' (1936) researches and later discussed in other researches (e.g. Arrow, 1970Arrow, , 1985Shubik, 1970;Bjornstad & Brown, 2004;Hertog, 2010;Ajefu & Barde, 2015;Rosengard & Stiglitz, 2015;NSW, 2017). Scientists have built the conceptual framework showing how (a) the deadweight loss of market failures decrease and (b) costs of the government intervention increase with the increased level of the government intervention.…”

Section: Introductionmentioning

confidence: 89%

Approach of scaling the level of government intervention in the financial market

Freimanis

Šenfelde

2020

11th International Scientific Conference “Business and Management 2020”

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In the field of the economics’ regulation researchers so far have built the conceptual framework showing how the deadweight loss of market failures decrease and costs of the government intervention in-crease with the increased level of the government intervention. In order to quantify relationships between the level of intervention, intervention costs and the deadweight loss with econometric models it is im-portant to understand how to apply coordinates for the data points to be included in the modelling. The main goal of the research presented in this paper is to find the unit measure for the asis of the independentvariable, i.e. to shape the categorical scale corresponding to the level of intervention.

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Section: Introductionmentioning

confidence: 89%

Approach of scaling the level of government intervention in the financial market

Freimanis

Šenfelde

2020

11th International Scientific Conference “Business and Management 2020”

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“…Regulation is initiated when it is perceived that the behaviors of economic agents will harm the economy. This means that, government intervention is premised on the belief that it knows what is best for the citizens than they do themselves (Ajefu & Barde, 2015). Indeed, Basel III regulatory guidelines came into operation to strengthen the banking system following the distortions caused by the financial crisis of 2007.…”

Section: Financial Regulations and Stock Marketmentioning

confidence: 99%

The Effect of Regulations on Stock Market Risk (Volatility) in Nigeria

Uhunmwangho

2022

emaj

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Recent regulations are directed at mitigating financial market risk, because risks, especially volatility dampen investors’ confidence, and hinder firms’ ability to raise funds at the exchange. Though, volatility had been investigated in the past, the joint utilization of micro and macro regulatory tools to address it after the global crisis is rare. It is on this backdrop that this study investigates the effect of regulations on stock market risk (volatility) in Nigeria. Thirteen interest charging banks listed in the Nigerian Exchange Limited for the period of 2010-2020 were investigated, because bank stocks are mostly traded at the exchange. Data for this study were collected from the banks’ annual reports, stock exchange official daily price lists as well as the Central Bank of Nigeria Statistical Bulletin various issues. The first difference generalized method of moments (DGMM) and the dynamic model were engaged in the investigation. Results of this study reveal that regulatory liquidity ratio and monetary policy rate positively and significantly impact stock market risk (volatility), while prescribe cash reserve ratio has negative and significant effects. The implication of this finding is that regulations except cash reserve instruments constitute frictions impacting equity market risk. Therefore, it is recommended that caution is exercised in the use of micro and macro regulatory weapons. Otherwise, investors’ confidence will decline and investments will reduce.

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“…Starting from Keynes (1936) government's role in the regulation of economics has been discussed. In those discussions government's intervention in the economy is justified by market failures that have been occurred (Arrow, 1970(Arrow, , 1985Shubik, 1970;Ajefu & Barde, 2015). Often normative approach is followed (Rosengard & Stiglitz, 2015), when market failures prescribe what government should do in order to achieve Pareto efficiency in the market.…”

Section: Government Regulationmentioning

confidence: 99%

Methodology for the Assessment of Regulation Costs in the Banking Market

Freimanis

Šenfelde

2021

International Scientific Conference „Contemporary Issues in Business, Management and Economics Engineering"

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Purpose – In the field of the economics’ regulation researchers so far have built the conceptual framework showing how the deadweight loss of market failures decrease and costs of the government intervention increase with the increased level of the government intervention. In order to quantify relationships between the level of intervention, intervention costs and the deadweight loss with econometric models it is important to understand how to quantify the regulation costs as a part of intervention costs. The objective of the research presented in this paper is to find the appropriate methodology for the quantification of the regulation costs in the banking market. Research methodology – literature review (regarding theories), mathematical methods for quantification and econometric methods for validation purposes. Findings – research shows that in the assessment of regulation costs three main stakeholders should be included – microprudential regulator, macroprudential regulator and financial regulation’s policy maker. Research presents their cost assessment methodology. Its validation shows that in general methodology works as expected, i.e., higher government intervention levels lead to higher regulation costs, however this general rule has exceptions, which in authors’ view indicates that other factors have an impact on the cost levels. Research limitations – research shows how to assess the costs of main stakeholders based on the publicly available information. More precise view could be obtained if in the cooperation with authorities more details on certain cost items are received. Practical implications – research results will be used to assess all government intervention costs (other positions include compliance costs and other indirect costs) and finalize the quantification of the framework. Quantified framework could be used for more precise policy making regarding the regulation of the banking market. Originality/Value – research shows how to quantify the regulation costs of the banking market as currently there are only conceptual ideas.

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Market Efficiency and Government Intervention Revisited: What Dorecent Evidence Tell Us?

Cited by 9 publications

References 5 publications

Approach of scaling the level of government intervention in the financial market

Approach of scaling the level of government intervention in the financial market

The Effect of Regulations on Stock Market Risk (Volatility) in Nigeria

Methodology for the Assessment of Regulation Costs in the Banking Market

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