Regulating Financial Innovation: A Multifaceted Challenge to Financial Stability, Consumer Protection, and Growth
Forthcoming, Oxford Handbook of Financial Regulation (Oxford University Press, 2015).
34 Pages Posted: 25 Jun 2014 Last revised: 4 Jun 2019
Date Written: June 24, 2014
The chapter reconceptualizes financial innovation. In this context, it discusses the risks of financial innovation and contemporary regulatory reforms addressing those risks. It provides a critique of contemporary reforms. Finally, it stresses the need for a new framework to regulate financial innovation to foster long-term growth and curb speculation. Regulation ought to focus on altering innovators' incentives through a properly balanced mix of incentives and sanctions.
Keywords: financial innovation, derivatives, securitisations, global financial crisis, shadow banking, Dodd Frank Act, MIFID II, MIFIR, EMIR
JEL Classification: F30, G15, G18, G10, G24, G28
Suggested Citation: Suggested Citation