Chapter 11 The Economics of Financial Regulation

Chapter Objectives

By the end of this chapter, students should be able to:

1. Explain why the government can’t simply legislate bad things out of existence.
2. Describe the public interest and private interest models of government and explain why they are important.
3. Explain how asymmetric information interferes with regulatory efforts.
4. Describe how government regulators exacerbated the Great Depression.
5. Describe how government regulators made the Savings and Loan Crisis worse.
6. Assess recent regulatory reforms in the United States and both Basel accords.