Show Summary Details

Page of

PRINTED FROM OXFORD HANDBOOKS ONLINE (www.oxfordhandbooks.com). © Oxford University Press, 2018. All Rights Reserved. Under the terms of the licence agreement, an individual user may print out a PDF of a single chapter of a title in Oxford Handbooks Online for personal use (for details see Privacy Policy and Legal Notice).

date: 16 February 2019

Abstract and Keywords

This Chapter examines why financial markets are prone to crisis and the relationship between financial crisis and regulation. It first provides an overview of financial crises generally before assessing the historical role of regulation in financial crises and its potential in averting future crises. It then considers various theories that have been put forward to explain why financial crises arise, with particular reference to theories that invoke cognitive error, moral hazard, information asymmetry, and agency costs. It also looks at arguments concerning market efficiency vs market failure, the potential positive and deleterious aspects of financial regulation and financial crises, and policy instruments that are available to regulators. More specifically, the Chapter analyses governance mechanisms, bank capital requirements, capital controls, and lender of the last resort.

Keywords: financial markets, financial crisis, cognitive error, moral hazard, information asymmetry, market efficiency, market failure, financial regulation, governance, bank capital

Access to the complete content on Oxford Handbooks Online requires a subscription or purchase. Public users are able to search the site and view the abstracts and keywords for each book and chapter without a subscription.

Please subscribe or login to access full text content.

If you have purchased a print title that contains an access token, please see the token for information about how to register your code.

For questions on access or troubleshooting, please check our FAQs, and if you can''t find the answer there, please contact us.