The Network Effects of International Financial Regulation
32 Pages Posted: 27 Dec 2018 Last revised: 3 Jan 2019
Date Written: November 20, 2018
This paper examines the question of global coordination among financial regulators through the lens of network effects. It introduces and surveys three unique kinds of network effects which can be created by the adoption of a global financial regulatory standard: (a) network effects in the financial markets; (b) network effects among the regulated firms; and (c) network effects among the financial regulators themselves. This paper offers a model which shows that positive network effects can generate a spiral ratchet effect that will induce countries to sequentially adopt global financial regulatory standards.
Keywords: network effects, financial regulation
JEL Classification: K33, C45
Suggested Citation: Suggested Citation