Rethinking Corporate Law During a Financial Crisis

Listokin, Yair; Mun, Inho Andrew

doi:10.2139/ssrn.3105175

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Failing Sifi Shareholder Rights In Shadow Resolutions1

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2019

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“…Yair Listokin and Inho Mun argue that corporate law can play a greater role than it currently does in mitigating systemic risk. 187 In particular, they note that an important tool that is routinely used to mitigate the negative consequences of a financial crisis is "regulation by deal" (or shadow resolution) by which a solid financial firm acquires a defaulting SIFI under pressure from and/or with the financial support of the government. 188 While regulation by deal ensures that the negative externalities associated with the default of the target SIFI are prevented, it also allows the shareholders of the defaulting firm to hold the economy hostage.…”

Section: Failing Sifi Shareholder Rights In Shadow Resolutionsmentioning

confidence: 99%

Network-Sensitive Financial Regulation

2019

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Section: Failing Sifi Shareholder Rights In Shadow Resolutionsmentioning

confidence: 99%

Network-Sensitive Financial Regulation

2019

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Financial Regulation and Externalities: Efficiency vs Politics

Hertig

2019

Annales Des Mines - Réalités Industrielles

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Fundamentally, financial regulation aims at facilitating access to finance. From an efficiency perspective, this means that entrepreneurs as well as consumers should get financing at competitive rates. However, the rewards of financial regulation are not necessarily equally distributed, an externality that is likely to favor some financial intermediaries or industrial firms over others. Financial crisis regulation tackles externalities more directly. In particular, prudential regulation generally targets those firms that are most likely to be a source of systemic risk – The aim being to impose the internalization of externalities. However, efficiency is not the sole driver of financial regulation. Lawmakers and enforcement agents may favor specific interest groups or take into account fairness considerations. This kind of intervention is likely to produce externalities by having an impact on the production and distribution of goods and services. In particular, regulatory interventions to facilitate access to finance in specific industries is likely to distort competition within or across industries.

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Rethinking Corporate Law During a Financial Crisis

Cited by 2 publications

References 16 publications

Network-Sensitive Financial Regulation

Network-Sensitive Financial Regulation

Financial Regulation and Externalities: Efficiency vs Politics

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