Questions tagged [regulation]

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Do Fines Imposed by Regulators Improve Performance?

After receiving a fine, do companies immediately seek to recoup their loses or do they take it on the chin? I'm just wondering if it's the most efficient way of deterring complacency or non ...
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Does price cap in emergency situation (COVID-19) reduce the availability of a good? Does unregulated market increase it instead?

I was discussing with one of my friend about Italy price cap on surgical mask to control speculation. He says price cap does not allow industries to invest more to increase the production that would ...
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Reason for SMEs in the European Union employing the bulk of people?

Is there any specific reason why SMEs in the European Union employ the vast majority of people in general as well as in certain industries? Are they exempt from certain regulatory burdens such as ...
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How can you define a commodity's level of pollution intensity?

I am doing a report on whether environmental regulation has an impact on goods exports for the UK (Using difference-in-differences). I have export data from 1990 to 2018 split by SITC codes. However, ...
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Minimum requirements under basel 3

Why is it that banks are told to maintain 4.5% of CET1 and capital conservation buffer of 2.5% of CET1 instead of 7 % of CET1???
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Is there a list of U.S. government regulations or actions that depend on government produced statistics?

I'm interested in compiling a list of government actions that depend on government produced figures. For example social security benefits depend on the CPI. I don't know if such a list already exists.
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Economic Regulation using Price caps

Based on my understanding both the equations are price caps, for firm A real decrease must be 8% and for B real increase must be 1%. But I don't understand how will I choose between the 2 as an ...
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How is market making not considered manipulation? [closed]

When I buy a stock I don't actually buy anything. My broker gives money to Goldman Sachs which gives a share at an arbitrary price. And they collect a profit on the difference between the price for ...
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28 views

Accounting of common stock and capital surplus for banks

I am trying to understand the accounting involved with bank capital and am a bit confused about the common stock and capital surplus lines on balances sheets. I would like to know if the following ...
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2answers
49 views

Why is common stock included in bank capital?

Capital represents the loss-absorbing capacity of a bank. I do not understand how shares issued in the past provide any indication of a bank's loss-absorbing capacity. I understand that common equity ...
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1answer
65 views

Cournot's game profit maximisation first order condition question

My question is about the last part (I attached the rest for context). I don't understand the final line at all. I thought the first order condition would just be to set the derivative = 0. Very ...
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China approval for US company acquisition

Why does China has to give approval to two US companies merging together? There have been quite a few examples in the last time, as UTC & Rockwell Collins as well as Qualcomm acquiring NXP ...
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Can one single payment contain multiple Merchant Category Codes (MCC)? [closed]

Some payment cards can be limited for certain purposes only (e.g. for paying only for food, or only for car fuel). When you try to pay for a different purpose, the system rejects the payment. I ...
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65 views

What are the arguments for banning insider trading?

I can't see any economic argument for banning insider trading. In general, the point of allowing financial securities to be traded is to ensure that they are properly valued. "Insiders" seem better ...
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Size and influence of the regulatory/supervisory sector

I am interested in the size of what I call the regulatory/supervisory sector in Western economies. A regulatory/supervisory (R&S) activity involves either: Determining a set of rules economic ...
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1answer
92 views

Can't government experiment on price in the case of a monopoly?

In the lecture given by Jon Gruber at MIT, he talks about the governmental regulations on monopolies, and he states that (in short) for government to regulate a monopoly, it needs to know the ...
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What were the liquidity requirements prior to Basel III?

I am investigating the impact of enforcing the Basel III liquidity requirements with a focus on the LCR. I have found some information about regulations in fore prior to Basel III in Sweden and ...
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1answer
934 views

What's the Difference Between Being Pro-business and Being Pro-market?

In a recent interview I watched a economist say something along the lines of: "There is a distinction between being pro-business and being pro-market. There should be rules in place so that ...
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110 views

Free market defense against anti-competitive behavior?

One argument against a completely free market economy without "government" oversight is the tendency towards anti-competitive behavior. The argument is that government laws are needed to prevent anti-...
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Hayek's defense of competition regulation

This article claims Hayek endorsed competition regulation: As it evolved, neoliberalism became more strident. Hayek’s view that governments should regulate competition to prevent monopolies from ...
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114 views

How effective is progressive tax at regulating monopoly?

Regardless of the morality of progressive taxes, the economical benefit of progressive tax is at least debatable. But could a highly progressive tax replace at least some of the american/european anti-...
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1answer
89 views

Should the government regulate the price of bananas? [closed]

Diclaimer: This is not a homework question. Every word of it was written originally by me. Hypothetical Scenario Alice is shopping for groceries and thinks the current price of bananas at ...
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How can a free market be operated in a way that significant social and environmental costs are intrinsically covered?

More precisely, is there any practical way to operate a free market so that external costs, namely negative social and environmental impacts, become naturally (intrinsically) covered (paid for or ...
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Where does the value of implicit government banking guarantees end up?

Post-Lehman a widespread political agenda has established to minimize implicit government guarantees to banks. However, in the buid-up of new banking regulations, lending to small and mid-sized ...
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34 views

Is anti-competitive behavior a threat in a society with free trade and no regulation?

A question that I have is whether a truly economically free society needs to (or should) have laws against anti-competitive behavior. Take liquor distribution as an example. In the United States ...
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What sectors would be most affected positively or negatively by Trump´s trade agreement renegotiations?

One of Trump´s stated policies is that he will renegotiate the trade agreements with China and the Canada and México (NAFTA). This renegotiation might go well in which maybe the US gets freer access ...
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1answer
141 views

What would be the economic impact of regulating advertising?

What I mean by that putting a regulation on businesses that says they can't spend more on advertising than expanding their business. I know something like this would be very hard to regulate, but I'...
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Why hasn't massive derivatives exposures at banks already led to disaster?

I recently heard that Deutsche Bank had $72trillion of "derivatives exposure", which is many times greater then the entire German GDP. Now as I understand it, derivatives are essentially just bets ...
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Wouldn't abolition of cash give rise to a substitute currency?

Some countries (e.g. Sweden and Denmark) plan to abolish physical cash in the future and restrict the use of cash to electronical deposits. One of the reasons for this is to prevent hoarding / boost ...
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183 views

Are obstructed views a negative externality?

I recently read an excellent paper on the causes of high urban real estate prices in the United States, Why is Manhattan so expensive? Regulation and the rise in house prices (GLAESER, GYOURKO, and ...
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72 views

Regulatory differences between stocks and bonds

If you buy stocks of a company you are buying a share in that business. If you buy bonds from the same company you are essentially loaning them money for future payment. I am guessing (correct me if ...
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3answers
91 views

Books/Papers on Macroprudential Regulation

I am looking for some good introductory papers or possible books on macroprudential regulation.
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72 views

References where fewer rules resulted in better governance

I am trying to find references that support an idea that I think I read in a book on theory of institutions. I can't find the original reference. Basically, I'd like to find anything that talks about ...
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6k views

What does it mean when a bank is “fully loaned up”?

Please briefly explain the situation when a bank is "fully loaned up".
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4k views

Difference between CCAR and ICAAP stress tests

What is the difference between ICAAP and CCAR? Except that one is for USA and other is for Canada?
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634 views

How do we explain the difference in average leverage between banks and non-financial firms?

I've been reading a little about the capital structure of banks. For example, in this working paper, "Financing as a Supply Chain: The Capital Structure of Banks and Borrowers" by Gornall and ...
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204 views

Banking Regulatory Frameworks, between the 1973 collapse of Bretton Woods and the introduction of the Basel Accords in 1988?

Does anyone know of any work on banking system behaviour, and in particular the governing regulatory frameworks that applied between the 1973 collapse of the gold standard based Bretton Woods system ...
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272 views

Is there a theory of financial regulation?

I wonder whether there exists (even a young) theory of financial regulation in the sense of "how to regulate a financial institution/system in an optimal manner"? I mean, there is experience about ...