Cost-Benefit Analysis as a Framework for Financial Regulation

25 Pages Posted: 18 Apr 2014

See all articles by John H. Cochrane

John H. Cochrane

Hoover Institution; National Bureau of Economic Research (NBER); University of Chicago - Booth School of Business

Date Written: February 16, 2014

Abstract

Should Congress enact a formal cost-benefit analysis requirement for financial regulation? I survey the nature of costs and benefits of financial regulation, both “macro” regulation designed to stop crises and “micro” regulation of products, markets, and institutions. Although I find that financial regulation often grossly violates cost-benefit tests, the nature of its costs and benefits means that financial regulation is not likely to be much improved by adding a formalized cost-benefit procedure.

Keywords: cost-benefit, benefit-cost, financial regulation

JEL Classification: G28, G38, D61

Suggested Citation

Cochrane, John H., Cost-Benefit Analysis as a Framework for Financial Regulation (February 16, 2014). Available at SSRN: https://ssrn.com/abstract=2425885 or http://dx.doi.org/10.2139/ssrn.2425885

John H. Cochrane (Contact Author)

Hoover Institution ( email )

Stanford, CA 94305-6010
United States
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HOME PAGE: http://faculty.chicagobooth.edu/john.cochrane/index.htm

National Bureau of Economic Research (NBER)

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University of Chicago - Booth School of Business ( email )

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Chicago, IL 60637
United States
773-702-0458 (Fax)

HOME PAGE: http://faculty.chicagobooth.edu/john.cochrane/research/Papers/

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