To understand the appropriate regulatory response to the crisis, we start from the basic market failures that justify regulation in financial markets. Neglecting these first principles contributed to the market and regulatory failures. Regulation that induces better outcomes through creating...

To understand the appropriate regulatory response to the crisis, we start from the basic market failures that justify regulation in financial markets. Neglecting these first principles contributed to the market and regulatory failures. Regulation that induces better outcomes through creating...

Stricter regulatory surveillance in emerging market economies (EMEs) largely insulated their financial systems from the crisis. Development and convergence of regulatory apparatus has been rapid. In some respects, EMEs may be closer to new global norms. The development of financial markets,...