No Country Left Behind: History Complicates Efforts to Harmonize Global Regulation

The European Union (EU) enacted a series of regulations in the early 2000s to improve the financial markets of member states. While the new regulations were formally the same across the EU, member countries must individually implement, supervise, and enforce them. Our paper, recently published in the Review of Financial Studies and available here, uses this situation to estimate the causal effect of securities regulation on market liquidity and also to examine how prior conditions, implementation, and enforcement affect the results of new regulation.

In our study, we examined the liquidity effects of two EU directives on securities regulation. … Read more

Can Securities Regulation Solve Social Problems?

Regulators seem to think so. In the Dodd-Frank Act, policymakers made an unprecedented move towards using securities regulation to address issues unrelated to the Securities and Exchange Commission’s (“SEC”) core mission of protecting investors and maintaining the fair and efficient functioning of financial markets. The Dodd-Frank Act requires financial statement dissemination of information regarding purchases of war minerals from Congo and mine health and safety performance. The objectives of these policies are noble—more than ten million people have died in Africa’s Great War and every year hundreds of workers are injured or killed in U.S. mines. Yet, can such regulation … Read more