Reflections on the Global Financial Crisis: Lessons for Regulatory Reforms and Regional Integration in ECOWAS

23 Pages Posted: 7 Sep 2011

See all articles by C. A. Chuku

C. A. Chuku

University of Uyo

Usenobong F. Akpan

Central Bank of Nigeria, Abuja

Date Written: September 7, 2011

Abstract

The global financial crisis so far has taught stakeholders some lessons. One lesson is that it has provided substantial evidence in favour of the view that ‘self-regulation’ or the ‘invisible hand’ cannot be relied upon to ensure financial stability. In view of this, the task of appropriately reforming the national and regional financial regulatory architecture of ECOWAS member states is paramount. By first identifying the regulatory lapses that were exposed by the crisis, the paper offers several remedial options in this direction. The major remedial devices being the broadening of the spectrum of regulation to accommodate all instruments and segments of the financial system, the alignment of the compensation of financial executives with their long term performance, the breaking up of too-big-to-fail (TBTF) financial institutions among others. The paper recognises the central bank as the first line of defence in times of crisis and clarifies some of the conflicting roles of the central bank during financial crisis. Along these lines, particular emphasis is given to the role of the central bank as a macroprudential regulator, its dilemma between maintaining price and financial stability, and its role of incentivising itself. The reform proposals that are presented in the paper require that two additional regulatory institutions be set up at the national level, that is; the Financial Institutions Regulatory Commission (FIRC) and the Financial Consumers Ombudsman (FCO). At the ECOWAS level, the setting up of a special intervention fund and two additional institutions is advocated. These institutions include; the West African Systemic Risk Council (WASRC) and the West African Guild of Financial Supervisors (WAGFS).

Keywords: Financial crisis, Financial regulation, ECOWAS integration, central banks

JEL Classification: E58, F42, G28

Suggested Citation

Chuku, Chuku Agbai and Akpan, Usenobong F., Reflections on the Global Financial Crisis: Lessons for Regulatory Reforms and Regional Integration in ECOWAS (September 7, 2011). Available at SSRN: https://ssrn.com/abstract=1923673 or http://dx.doi.org/10.2139/ssrn.1923673

Chuku Agbai Chuku (Contact Author)

University of Uyo ( email )

Department of Economics, University of Uyo
Uyo, Akwa Ibom 520003
Nigeria
+2348067247177 (Phone)

Usenobong F. Akpan

Central Bank of Nigeria, Abuja ( email )

Plot 33, Abubakar Tafawa Balewa way, Central Busin
Abuja, 900211

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