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Theory of Banking Regulation based on Macroprudential Policy

Document Type : Original Article

Authors

1 Assistant Professor of Law Faculty of Shahid Beheshti University

2 shahid beheshti university

Abstract

Trade liberalizations of 1970s caused financial crises in some countries. After the global financial crisis of 2007, the viewpoint to financial stability has been changed and countries considered the stability of the financial system in whole instead of financial stability of each bank. To this aim, they based banking regulation on macroprudential policy. The haste of countries caused ignoring the theory of bank regulation based on macroprudential policy. In case of uncertainty in banking activities causing market failure, developing a framework for macroprudential policy will not be possible. This research is done through library sources and based on analytic-descriptive approach. The main question of the article is what is the theory of banking regulation based on macroprudential policy? Accordingly, some of the banking activities cause negative externalities that threaten financial stability. The regulator should identify the negative externalities and draw a proper legal framework based on macroprudential policy for the purpose of market failure correction.

Keywords

References

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Economic and Commercial Law Researches
Volume 1, Issue 1 - Serial Number 1
April 2023
Pages 97-124
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