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Regulation and Sausages
Author(s) -
Gale Douglas
Publication year - 2015
Publication title -
the manchester school
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.361
H-Index - 42
eISSN - 1467-9957
pISSN - 1463-6786
DOI - 10.1111/manc.12109
Subject(s) - ambiguity , market liquidity , adverse selection , economics , financial market , resilience (materials science) , hoarding (animal behavior) , financial crisis , psychological resilience , business , monetary economics , microeconomics , macroeconomics , finance , computer science , psychology , ecology , physics , foraging , biology , psychotherapist , thermodynamics , programming language
The experience of market disruption during the recent financial crisis has focused attention on the requirements for increasing the resilience of financial markets. Theoretical research has provided new insights into the sources of ‘market freezes’. These models offer new explanations for the sudden drying up of liquidity in terms of adverse selection, ambiguity aversion, coordination failure, hoarding and market manipulation. The challenge is to make use of these insights to help design better regulatory frameworks and improve the structure of the financial system.