Fancy That, There Are Costs To Financial Regulation

We really must control the banks you know. Fat Cat B’stards that they are, can’t have them just doing as they wish!

The problem with this is that there are costs to everything. And the more we control he bankers then the less finance flows through to firms. Which, given that a reasonable purpose of a financial system is that firms get financed means that perhaps we don’t actually want to regulate them bankers too much:

The micro impact of macroprudential policies: Firm-level evidence
Meghana Ayyagari, Thorsten Beck, Maria Soledad Martinez Peria 11 December 2018

Macroprudential tools have been implemented widely following the Global Crisis.…

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