|
on Regulation |
| By: | Jennifer A. Elliott; Ana Carvajal |
| Abstract: | This paper examines the strengths and weaknesses of securities regulatory systems worldwide with a view to a better understanding of common problems and areas of global concern. We found that a consistent theme emerges regarding the lack of ability of regulators to effectively enforce compliance with existing rules and regulation. In many countries, a combination of factors, including insufficient legal authority, a lack of resources, political will and skills, has undermined the regulator's capacity to effectively execute regulation. This weakness is more acute in areas of increased technical complexity such as standards for and supervision of the valuation of assets and risk management practices. |
| Keywords: | Securities markets , Securities regulations , |
| Date: | 2007–11–09 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:07/259&r=reg |
| By: | Rui Cunha Marques (CESUR, DECIVIL-IST, Universidade Técnica de Lisboa); Ana Oliveira-Brochado (EDGE – Faculdade de Economia do Porto, CESUR, DECIVIL-IST, Universidade Técnica de Lisboa) |
| Abstract: | This paper provides an overview of how the major airports are regulated in Europe. In order to eliminate the potential of airports to exercise market power and protect the public interest, it has become increasingly necessary to set a common regulatory framework. We intend to discuss the need of a single regulator in Europe to monitor or establish the quality of service and the charges practiced by the airports, to ensure cost-relatedness, transparency and non-discrimination. The existing regulatory approaches regarding aeronautical charges and their economic implications are also analyzed. We propose the creation of a European Observatory for this sector. |
| Keywords: | airports, economic regulation, European Observatory |
| JEL: | L51 L52 L93 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:por:fepwps:259&r=reg |
| By: | Ilie, Livia; Horobet , Alexandra; Popescu , Corina |
| Abstract: | Competition ensures competitive prices. In this respect, the liberalisation of the EU energy markets is a must. The regulatory framework for the energy markets should be properly designed and implemented by the member states in order to ensure enough competition. This paper aims to analyse the status quo of the EU energy markets in terms of regulatory framework and degree of competition and to recommend improvements of the system in order to balance the issues of competition, energy security and environment protection in the EU energy markets. |
| Keywords: | Energy market; regulation; competition; energy security; climate change |
| JEL: | K2 L5 Q4 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6419&r=reg |
| By: | Horobet , Alexandra; Ilie, Livia |
| Abstract: | Competition is the mechanism that helps companies, institutions and markets to become more productive and efficient. one of the main obstacles to economic growth is represented by the policies that hinder competition. Excessive protection may create a handicap for the European economic system which will have not all the necessary instruments to face the increasing competition between companies, countries, economic regions.The paper aims at analyzing the relationship between regulation, competition and economic performances applied to European capital markets, as opposed to US capital markets. |
| Keywords: | regulation; competition; capital market; integration |
| JEL: | G1 D0 |
| Date: | 2007–12–19 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:6133&r=reg |
| By: | Daniela Russo (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Giacomo Caviglia (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Chryssa Papathanassiou (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.); Simonetta Rosati (European Central Bank, Kaiserstrasse 29, 60311 Frankfurt am Main, Germany.) |
| Abstract: | This paper is analysing the current national and international regulatory regimes relevant for European banks, CSDs and ICSDs, and is comparing them with the requirements in order to answer the following questions - Is there any overlap between the provisions of the CPSS-IOSCO Recommendations and the existing international and national requirements to which European SSSs and banks are subject? Are current provisions equivalent or more restrictive (“super-equivalent”) for banks and CSDs? In what respect? Does the overlap between the CPSS-IOSCO Recommendations and existing regulation result in double requirements?. |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:ecb:ecbops:20070076&r=reg |
| By: | Severin Borenstein; Meghan Busse; Ryan Kellogg |
| Abstract: | Regulators and firms often use incentive schemes to attract skillful agents and to induce them to put forth effort in pursuit of the principals' goals. Incentive schemes that reward skill and effort, however, may also punish agents for adverse outcomes beyond their control. As a result, such schemes may induce inefficient behavior, as agents try to avoid actions that might make it easier to directly associate a bad outcome with their decisions. In this paper, we study how such caution on the part of individual agents may lead to inefficient market outcomes, focusing on the context of natural gas procurement by regulated public utilities. We posit that a regulated natural gas distribution company may, due to regulatory incentives, engage in excessively cautious behavior by foregoing surplus-increasing gas trades that could be seen ex post as having caused supply curtailments to its customers. We derive testable implications of such behavior and show that the theory is supported empirically in ways that cannot be explained by conventional price risk aversion or other explanations. Furthermore, we demonstrate that the reduction in efficient trade caused by the regulatory mechanism is most severe during periods of relatively high demand and low supply, when the benefits of trade would be greatest. |
| JEL: | L51 L95 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13679&r=reg |
| By: | Alfredo Burlando (Boston University); Alberto Motta (University di Padova) |
| Abstract: | We consider a model of law enforcement where homogenous, risk neutral, and corruptible inspectors are responsible for monitoring citizens who may have committed criminal acts. A welfare maximizing, budget constrained government can implement appropriate wage policies to prevent collusion, but we find that governments characterized by high administrative costs in administrating fines, or by a low ability to spot and prosecute corruption, may prefer to let corruption happen. By allowing citizens to avoid all monitoring by reporting their own violations first, the government is able to increase welfare by hiring fewer inspector, and in some instances by shifting from a regime of corruption to a regime where there is none. Moreover, self reporting fully eliminates any deadweight losses that arise from the incentive schemes when inspectors are risk averse. In order for self-reporting to have these effects, it is necessary that the government maintains also an optimal incentive scheme for its inspectors. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:pad:wpaper:0063&r=reg |
| By: | Adriana Z. Fernandez; Robert W. Gilmer; Jonathon L. Story |
| Abstract: | This paper examines the impact of Clean Air Act Amendments of 1990 (CAAA) environmental regulations on U.S. motor gasoline import patterns. Following the damage to U.S. petroleum refining infrastructure from hurricanes Katrina and Rita, the federal government provided temporary relief for several weeks from so-called boutique fuel specifications designed to improve air quality in certain regions of the country. These temporary waivers increased marketers’ ability to sell gasoline originally destined for specific regional markets into a greater number of markets. We hypothesize that these same waivers also encouraged gasoline imports more than increased prices would have alone. We test our hypothesis using two analyses. The first consists of a simple transfer function analysis designed to separate price effects (and thus effects of refinery closures) from the effects of regulatory relief. The second analysis consists of a natural experiment comparing the primary recipient of regulatory relief—the Gulf Coast gasoline market— to the rest of the United States. Both analyses suggest that the CAAA-related specifications prevent a substantial amount of gasoline imports from entering the United States under normal circumstances. |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:fip:feddwp:0709&r=reg |
| By: | T. Nicolaus Tideman; Florenz Plassmann |
| Abstract: | The efficiency of mechanisms to control CO2 emissions is limited by disagreement about the harm from these emissions. Thus existing emission control mechanisms require negotiated compromise regarding either the efficient price or the level of emissions to be tolerated. As an alternative to conventional mechanisms, we offer a mechanism in which today?s price of emissions is determined by a market-based estimate of future beliefs about the cost of emissions. This reduces the uncertainty about the right price for emissions and makes it likely that emitters will base their emission decisions on more accurate estimates of the harm they cause. |
| Keywords: | Environmental regulation, Climate change, Prediction market |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:vpi:wpaper:e07-9&r=reg |
| By: | Acharya, Viral V; Johnson, Tim |
| Abstract: | Recent takeover activity has been characterized by broader participation in acquiror financing on both debt and equity sides. We focus on private equity buyouts, and investigate whether the number of financing participants is related to the likelihood of insider trading prior to the bid announcement. Results suggest that more insiders leads to more insider trade. We study stock, option, bond, and CDS markets. Suspicious stock and options activity is associated with more equity participants, while suspicious activity in the credit markets is associated with more debt participants. The results highlight an important channel in the flow of information and may be consistent with models of limited competition among informed insiders. They are unlikely to be consistent with models of optimal regulation. |
| Keywords: | asymmetric information; LBO; private equity; regulation |
| JEL: | D82 G14 K42 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:6622&r=reg |
| By: | Mattoo, Aaditya; Hoekman, Bernard |
| Abstract: | This paper discusses what could be done to expand services trade and investment through a multilateral agreement in the World Trade Organization. A distinction is made between market access liberalization and the regulatory preconditions for benefiting from market opening. The authors argue that prospects for multilateral services liberalization would be enhanced by making national treatment the objective of World Trade Organization services negotiations, thereby clarifying the scope of World Trade Organization commitments for regulators. Moreover, liberalization by smaller and poorer members of the World Trade Organization would be facilitated by complementary actions to strengthen regulatory capacity. If pursued as part of the operationalization of the World Trade Organization ' s 2006 Aid for Trade taskforce report, the World Trade Organization could become more relevant in promoting not just services liberalization but, more importantly, domestic reforms of services policies. |
| Keywords: | Emerging Markets,Economic Theory & Research,Trade and Services,Free Trade,Banks & Banking Reform |
| Date: | 2007–12–01 |
| URL: | http://d.repec.org/n?u=RePEc:wbk:wbrwps:4451&r=reg |
| By: | Nancy Masschelein (National Bank of Belgium, Department of International cooperation and Financial Stability) |
| Abstract: | This paper provides an overview of the questions that will need to be addressed in order to determine whether increased cyclicality in capital requirements will exacerbate the pro-cyclicality in the financial system. Many central banks have raised concerns about the potential cost of procyclicality that could come with the Basel II framework, which will be implemented in the EU via the Capital Requirements Directive (CRD). Previous capital adequacy rules required banks to hold a minimum amount of capital for each loan, regardless of the different risks involved. The main objective of the Basel II framework/CRD is to make capital requirements more risk-sensitive. Therefore, by construction, the capital requirements under the CRD will be more cyclical than under the previous rules. This raises two questions. First, does it matter whether regulatory capital requirements fluctuate more than before if banks’ (lending) behaviour is driven by other capital considerations (for example economic capital) ? Second, if it does matter, what impact will this have on the economic cycle? |
| Keywords: | Basel II/CRD, pro-cyclicality |
| JEL: | G18 E32 |
| Date: | 2007–10 |
| URL: | http://d.repec.org/n?u=RePEc:nbb:docwpp:200711-22&r=reg |
| By: | Morris M. Kleiner; Richard M. Todd |
| Abstract: | As the role of mortgage brokers in mortgage origination grew from insignificant in the 1980s to dominant in recent years, questions have arisen about whether its services help or harm consumers. In response, states have increasingly regulated the business, largely by creating and tightening occupational licensing requirements for mortgage brokers. The question of whether increased occupational licensing of mortgage brokers improves consumer outcomes is theoretically ambiguous and has been little studied empirically. This study introduces a new database of mortgage broker licensing requirements and assesses the relationships between these requirements and outcomes in both the labor market for brokers and the consumer market for mortgages. We find that most aspects of mortgage broker licensing systems, such as mandatory professional education, do not have a significant and consistent statistical association with market outcomes. However, one component -- the requirement in many states that mortgage brokers maintain a surety bond or minimum net worth -- does have a significant and fairly consistent statistical relationship with both labor and consumer market outcomes. In particular, we find that tighter bonding/net worth requirements are associated with fewer brokers, fewer subprime mortgages, higher foreclosure rates, and a greater percentage of high-interest-rate mortgages. Although we do not provide a full causal interpretation of these results, we take seriously the possibility that restrictive bonding requirements for mortgage brokers have unintended negative consequences for many consumers. On balance, our results also seem to support theories of occupational licensing that stress the importance of pure entry and exit barriers over those that focus more on the human capital effects of licensing. |
| JEL: | H77 J18 J4 J44 J8 K2 K31 L22 L38 L51 L84 |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:13684&r=reg |
| By: | Jan Kregel |
| Abstract: | This paper contrasts the economic incentives implicit in the Keynes-Minsky approach to inherent financial market instability with the incentives behind the traditional equilibrium approach leading to market stability to provide a framework for analyzing the stability induced by the recent changes in bank regulation to modernize financial services and the evolution of financial engineering innovations in the U.S. financial system. It suggests that the changes that have occurred in the profit incentives for bank holding companies have modified the provision of liquidity to the financial system by banks, and the way credit assessment has moved from banks to other actors in the system. It takes the current experience in financial instability created by the expansion, through securitization, of the mortgage market as an example of these changes. |
| Date: | 2007–12 |
| URL: | http://d.repec.org/n?u=RePEc:lev:wrkpap:wp_523&r=reg |
| By: | Jozef Konings; Hylke Vandenbussche |
| Abstract: | We analyze the relationship between Antidumping (AD) Protection and the productivity of EU domestic firms in import-competing industries. For this purpose we identify a panel of domestic firms between 1993 and 2003 that at some point during this period are affected by AD initiations. Using a difference-in-difference approach, we find that AD measures result in improvements of measured productivity for domestic firms. Total Factor Productivity (TFP) of protected firms increases by 2% in the short-run and by 5% to 13% in the long-run. However, there is substantial heterogeneity across firms. The effect of protection depends on the initial “distance-to-the-frontier firm” in the industry. While protection raises TFP of “laggard” domestic firms, it lowers TFP for “efficient” firms that operate close to the efficiency frontier. These results are consistent with recent theoretical work supporting the view that trade policy, under certain conditions, can induce technological catching-up. While this paper evaluates the effectiveness of AD policy it does not engage in a welfare analysis. |
| Keywords: | Total Factor Productivity, Antidumping protection, technological catching-up |
| JEL: | F13 L41 O30 C2 |
| Date: | 2007 |
| URL: | http://d.repec.org/n?u=RePEc:lic:licosd:19607&r=reg |