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Crises in the financial regulation of finance-led capitalism: a Minskyan analysis

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  • Mendonça, Ana Rosa Ribeiro de
  • Deos, Simone

Abstract

Financial markets are subject to more developed regulatory mechanisms than those of other sectors of the economy. This can be explained by the nature of financial transactions and by the extremely harmful consequences of financial crises for the entire economic system. The current regime of banking regulation is based on risk sensitive capital requirements and on market-based risk measurement and management, and it could be termed “supervised auto regulation”. The hypothesis put forward in this article is that this regulatory framework is not suitable for capitalist economies with highly developed financial systems and very little so for our specific finance-led accumulation regime. In the current scenario of widespread crisis, it seems especially relevant to analyze financial and, more specifically, banking regulation, from a Minskyan perspective.

Suggested Citation

  • Mendonça, Ana Rosa Ribeiro de & Deos, Simone, 2009. "Crises in the financial regulation of finance-led capitalism: a Minskyan analysis," Revue de la Régulation - Capitalisme, institutions, pouvoirs, Association Recherche et Régulation, vol. 6.
    • Handle: RePEc:rvr:journl:2009:7620
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    References listed on IDEAS

    as
    1. Jan Kregel, 2008. "Minsky’s Cushions of Safety: Systemic Risk and the Crisis in the U.S. Subprime Mortgage Market," Economics Public Policy Brief Archive ppb_93, Levy Economics Institute.
    2. L. Randall Wray, 2008. "Financial Markets Meltdown: What Can We Learn from Minsky," Economics Public Policy Brief Archive ppb_94, Levy Economics Institute.
    3. Bank for International Settlements, 2007. "Institutional investors, global savings and asset allocation," CGFS Papers, Bank for International Settlements, number 27.
    4. Hyman P. Minsky, 1992. "The Financial Instability Hypothesis," Economics Working Paper Archive wp_74, Levy Economics Institute.
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    More about this item

    Keywords

    Banking regulation; Finance-led capitalism; Financial instability;
    All these keywords.

    JEL classification:

    • E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation

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