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Lacunae in Financial Regulatory Framework vis-Ã -vis Financial Repression

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  • Gurbachan Singh

    (Gurbachan Singh is Associate Professor, Jawaharlal Nehru University (JNU), New Delhi, India. E-mail: gbsingh@mail.jnu.ac.in)

Abstract

This paper makes four points. First , it introduces a new ‘academic’ concept—optimal noise in financial markets. Second , it suggests that the government intervenes to take care of the problem of ‘free ride’ in financial markets. Third , it suggests regulation of entry into the finance profession, whose tasks would include ‘prescribing’ a portfolio choice for (financially) uninformed investors. Fourth , given that deposit insurance, lender of last resort, capital adequacy and supervision of banks are in place, there is no need to impose the following beyond reasonable prudential norms: (a) cash reserve ratio requirement, (b) statutory liquidity ratio requirement and (c) barriers to entry.

Suggested Citation

  • Gurbachan Singh, 2009. "Lacunae in Financial Regulatory Framework vis-Ã -vis Financial Repression," Review of Market Integration, India Development Foundation, vol. 1(2), pages 137-170, May.
    • Handle: RePEc:sae:revmar:v:1:y:2009:i:2:p:137-170
    DOI: 10.1177/097492920900100203
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    References listed on IDEAS

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    5. Raghuram G. Rajan, 2008. "Draft Report of the Committee on financial Sector Reforms," Working Papers id:1463, eSocialSciences.
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