Abstract

http://ssrn.com/abstract=536682
 
 

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The Costs and Benefits of Financial Market Regulation


Luigi Zingales


University of Chicago - Booth School of Business; National Bureau of Economic Research (NBER); Centre for Economic Policy Research (CEPR); University of Chicago - Polsky Center for Entrepreneurship; European Corporate Governance Institute (ECGI)

April 2004

ECGI - Law Working Paper No. 21/2004

Abstract:     
This paper revisits the controversy on regulation and applies its insights to the debate on corporate governance and mutual funds. The general result of this exercise is that a strong case can be made in favor of more mandatory disclosure. While theoretically there is scope also for other mandatory regulation, it is unclear whether its benefits exceed its costs. Furthermore, it is difficult to see how this ideal regulation could emerge from the political process, which tends to be dominated by incumbent firms. I propose a mechanism to reduce this bias.

Number of Pages in PDF File: 62

Keywords: Pigou's theory, Coase's theorem, costs and benefits of regulation, financial markets, social welfare, enforcement costs, disclosure requirements, political pressures, mandatory rules, default rules, behavioral literature, corporate governance, mutual funds

JEL Classification: G18, G38, K2

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Date posted: April 29, 2004  

Suggested Citation

Zingales, Luigi, The Costs and Benefits of Financial Market Regulation (April 2004). ECGI - Law Working Paper No. 21/2004. Available at SSRN: http://ssrn.com/abstract=536682 or http://dx.doi.org/10.2139/ssrn.536682

Contact Information

Luigi Zingales (Contact Author)
University of Chicago - Booth School of Business ( email )
5807 S. Woodlawn Avenue
Chicago, IL 60637
United States
773-702-3196 (Phone)
773-834-2081 (Fax)

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National Bureau of Economic Research (NBER)
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Cambridge, MA 02138
United States
Centre for Economic Policy Research (CEPR)
77 Bastwick Street
London, EC1V 3PZ
United Kingdom
University of Chicago - Polsky Center for Entrepreneurship
Chicago, IL 60637
United States
European Corporate Governance Institute (ECGI)
c/o ECARES ULB CP 114
B-1050 Brussels
Belgium
HOME PAGE: http://www.ecgi.org
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