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Brokers, Bureaucrats, and the Emergence of Financial Markets

Managerial Finance, Vol. 30, No. 5, pp. 57-71, 2004

17 Pages Posted: 16 Sep 2010  

Edward Peter Stringham

Trinity College

Peter J. Boettke

George Mason University - Department of Economics

Multiple version iconThere are 2 versions of this paper

Date Written: 2004

Abstract

This article provides a critical analysis of Frye (2000) and existing theories of self-governance. Following up on the recent studies by Stringham (2002, 2003), we focus our attention on the emergence of financial markets for several reasons. The common perception is that complicated financial instruments require state sanction to emerge. It is widely argued that in the absence of state regulation of of financial markets, cheating will be common. We maintain, in contrast, that the evidence does not support this pessimistic view. In fact, markets are capable of endogenously generating the rules that govern their operation and these rules discipline cheating severely. Finally, if we can persuasively make the case that self-governance in financial markets is effective - with the complicated nature of transactions that take place - then the argument for self- governance 4eis economic life, we contend, is much stronger than even classical liberalism has led us to believe.

Suggested Citation

Stringham, Edward Peter and Boettke, Peter J., Brokers, Bureaucrats, and the Emergence of Financial Markets (2004). Managerial Finance, Vol. 30, No. 5, pp. 57-71, 2004. Available at SSRN: https://ssrn.com/abstract=1676246

Edward Peter Stringham (Contact Author)

Trinity College ( email )

United States

Peter J. Boettke

George Mason University - Department of Economics ( email )

4400 University Drive
Fairfax, VA 22030
United States
703-993-1149 (Phone)
703-993-1133 (Fax)

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