Financial regulation aims to prevent market failures from "summary" of The Economics of Money, Banking and Financial Markets, eBook, Global Edition by Frederic S. Mishkin
Financial regulation plays a crucial role in maintaining stability and efficiency in financial markets. One of the primary objectives of financial regulation is to prevent market failures. Market failures can occur due to various reasons, such as asymmetric information, externalities, and lack of competition. These failures can lead to inefficiencies, distortions, and systemic risks in the financial system. Regulators implement rules and regulations to address these market failures and ensure that financial markets function smoothly. For example, regulations on disclosure requirements aim to reduce information asymmetry between market participants. By mandating companies to disclose relevant information to investors, regulators help to level the ...
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