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Prof. Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.

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Regulation in excess, regulatory overkill

A frequently voiced reproach with regard to the density of regulation in German and U.S. financial markets. From a factual point of view, the close-knit net of rules basically benefits both financial services institutions and investors. It reduces the risk of all kinds of fraud and strengthens confidence in the markets. Of course, it is not within the power of the supervisory authorities to completely rule out unfair practices. – On the other hand, it is also unlikely that too close supervision will lead to new competitors being kept out of the market. It could even lead to financial service providers encouraging the supervisory authorities to take measures with the aim of making market entry more difficult (capture theory: the supervisory authority is misused for the business interests of certain players). – See investor protection, supervision, supervision, European, supervision, preventive, supervisory avoidance, committee mania, Banana Skins Survey, BaFin levy, supervision, complete, capture theory, fragmentation, supervisory, competence conflict, supervisory, moral suasion, Murphy’s law, regulatory pressure, regulatory mania, straitjacking, subsidiarity principle, degree of transparency. – Cf. Deutsche Bundesbank Monthly Report of January 2006, pp. 41 et seq. (benefits and dangers of too tight regulation).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
Professor Dr. Eckehard Krah, Dipl.rer.pol.
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