The Determinants of Regulatory Responses to Risks from Financial Innovation: Post GFC Evidence for the G20

41 Pages Posted: 12 Dec 2014

See all articles by Ivan Diaz-Rainey

Ivan Diaz-Rainey

Department of Accounting, Finance and Economics, Griffith Business School, Griffith University; University of Otago

John Kevin Ashton

Bangor Business School; University of East Anglia (UEA)

Max Yap

University of Otago - School of Business

Murat Genç

University of Otago - School of Business - Department of Economics

Rosalind H. Whiting

University of Otago - Department of Accountancy and Finance

Date Written: December 10, 2014

Abstract

We explore the factors that shape the response of G20 countries to a Financial Stability Board (FSB) recommendation aimed at mitigating the risks from financial innovation. Using the FSB’s Implementation Monitoring Network Surveys, we develop an index of disclosed strength of regulatory response. We find that G20 countries have displayed large interpretive differences, little forward planning and have emphasized regulatory capabilities over firm capabilities when addressing the recommendation. Countries with strong central banks, more concentrated regulatory structures and bank-based financial systems responded more robustly, while countries with a large financial sector were marginally associated with a weaker response.

Keywords: Financial innovation, financial regulation, Global Financial Crisis, G20, Financial Stability Board

JEL Classification: G01, G18, G20, G28

Suggested Citation

Diaz-Rainey, Ivan and Ashton, John Kevin and Yap, Max and Genç, Murat and Whiting, Rosalind H., The Determinants of Regulatory Responses to Risks from Financial Innovation: Post GFC Evidence for the G20 (December 10, 2014). Available at SSRN: https://ssrn.com/abstract=2536674 or http://dx.doi.org/10.2139/ssrn.2536674

Ivan Diaz-Rainey (Contact Author)

Department of Accounting, Finance and Economics, Griffith Business School, Griffith University ( email )

Australia

University of Otago ( email )

Dunedin
New Zealand

John Kevin Ashton

Bangor Business School ( email )

Bangor Business School
College Road
Gwynedd LL57 2DG, Wales LL57 2DG
United Kingdom

University of East Anglia (UEA) ( email )

Norwich Research Park
Norwich, Norfolk NR4 7TJ
United Kingdom

Max Yap

University of Otago - School of Business ( email )

Dunedin
New Zealand

Murat Genç

University of Otago - School of Business - Department of Economics ( email )

PO Box 56
Dunedin
New Zealand

Rosalind H. Whiting

University of Otago - Department of Accountancy and Finance ( email )

Dunedin
New Zealand

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