The concept of regulatory systemic risk – a long-term imbalance, resulting from the misalignment between regulatory initiatives and market realities, that impacts multiple areas of the regulatory framework – is developed in the context of US securities regulation. The discussion offers two...

Despite Basel III's efforts to address capital and liquidity requirements, will the risks linked to regulatory arbitrage increase as a result of Basel III's more stringent capital and liquidity rules?As well as Basel III reforms which are geared towards greater facilitation of financial...

This is an unedited draft of the closing chapter of a forthcoming book, entitled Systemic Risk in the Financial Sector: Ten Years After the Great Crash, that will be published by CIGI Press in fall 2019 (edited by Douglas W. Arner, Emilios Avgouleas, Danny Busch, and Steven L. Schwarcz). The...

A decade after the financial crisis, regulators worry that the regulation enacted to help stabilize the financial system may be insufficient to prevent another crisis. Examining that regulation with the benefit of hindsight, this Article finds that much has been accomplished but much remains to...

The Dodd-Frank Act, enacted after the global financial crisis, requires U.S. financial regulators to define and regulate systemically risky firms and activities — a truly Sisyphean task. In this Essay, we identify two paths regulators have taken: a “descriptive approach,” which involves...

The standard macroprudential models focus on externalities and treat all prudential instruments as alternative, but equivalent, forms of Pigouvian taxes. This paper explicitly models individual banks’ risk choices and shows that different prudential instruments affect banks’ risk-taking...