- Bank shares rally predictably on the prospect of financial deregulation. They did so twice in the past 6 months already.
- However, financial deregulation is very risky as the cost of financial crises are much larger than those of garden variety recessions.
- Reducing the risk of future financial crisis should therefore be the main driver of financial regulation.
- The main driver of the Government proposals are to spur bank lending, while there is little evidence regulation holds that down in significant amounts.
- This therefore seems a business friendly proposal, rather than a market friendly proposal, an important difference.
Deregulation Rallies Bank Stocks, But Be Aware Of The Risks
June 19th, 2017 · No Comments
Tags: Financial regulation