The Fruits Of Bank Regulation

Arnold Kling has an interesting post concerning an IMF study by a couple of its economists. The study concludes that better regulation doesn’t necessarily lead to stronger banks. It’s worth a read.

By far the best part of the post was Kling’s comment at the end:

This is an unusual sort of paper, in that it tries to look for evidence that regulation works. Ordinarily, economists proceed directly from the observation that market results are imperfect to the conclusion that regulation is the solution. Faith-based regulation, as opposed to evidence-based regulation.

I wouldn’t dream of trying to embellish that observation.

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