The Law and Structure of the International Financial System: Regulation in the United States, EEC, and Japan

The Law and Structure of the International Financial System: Regulation in the United States, EEC, and Japan

The Law and Structure of the International Financial System: Regulation in the United States, EEC, and Japan

The Law and Structure of the International Financial System: Regulation in the United States, EEC, and Japan

Synopsis

The major themes of financial regulation in the U.S., the EEC, and Japan are discussed in four interwoven, but independent, essays. The central focus is the protection of the financial system by insuring prudential rules against systemic risks, particularly through promoting capital adequacy by international and national agreement and with due consideration to the distinction between the banking and securities business. The work concludes with the assertion that international harmonization of regulation is necessary for the long-run efficiency of financial markets.

Excerpt

This book considers two kinds of financial markets: universal banking markets such as Germany and Japan where banks own equity shares, and where financing is dependent on long-term relations and cross-ownerships between borrowers and lenders, and arm's-length financial markets, where stock markets are largely independent of banks and where market prices, rather than long-term relations, determine financing (sometimes called "capital market"). the latter system prevails in the United States (US) and United Kingdom (UK). Although in Japan large securities firms do exist, and bank ownership of equities is limited pursuant to us influenced legislation, relational financing predominates over arm's-lengths financing.

In capital market countries, many shareholders may hold shares as part of an index, the securities markets are liquid, and consumer credit is plentiful. in universal banking market countries where there is bank ownership and control of industrial companies, where control is exerted because of bank domination of securities markets, there tends to be less financial innovation and less access to consumer credit.

Until the Insider Trading Directive of the European Economic Community (EEC) and the recent changes in Japan and Japanese attitudes toward capital markets, insider trading was commonplace in the day-to- day business in Japan and Germany. Securities laws, as Americans understand them, and the awesome authority of the Securities and Exchange Commission (SEC) are unknown in the European heritage. the United Kingdom, which has always entertained a system far closer to that of the United States in terms of its separation of securities and banking, enacted sweeping legislation only in the 1980s; stock markets were deregulated and banks allowed to enter into the securities market, primarily through subsidiaries. the reforms culminated in the Financial Services Act of 1986. a regulatory framework similar to that created in the United States during . . .

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.