Takeaways for BGR MBA Class of 2015

BGR - Session 6
Reading:

The 2007-208 Financial Crisis: Causes, Impacts and the Need for New
Regulations IVEY, 2008: 908N14
(An analysis of the recent global financial crises and the emerging regulatory approach
to deal with the causes of this crises)
Takeaways

It is important for businesses to fully understand the scope and

effaciousness of the legal and regulatory framework, including, most
importantly, the quality of enforcement. Badly conceived or poorly
implemented regulation is worse than no regulation --- in either
case, protective measures may be necessary, as also, perhaps, an
element of self discipline.

Invariably hype, over-confidence, over-trading, and excessive risk

taking precede a financial crises like the recent 2007-8 crises which
began in the US with global contagion effects. The precise causes and
nature of a financial crises are almost always unpredictable. It is
believed, in retrospect, that the belittling and deriding of sectoral
regulation (like bank regulation, securities regulation etc.) and
the discouragement and weakening of antitrust enforcement led
to excesses, imprudence, and a precipitation of systemic risks which
were at the root of the 2007-8 crises.

Countries with a sound regulatory framework and capable regulators

are often able to mute an on settingcrises or deal with it effectively if it
occurs. Such environments are always more stable and hence
attractive for businesses. It is in the interest of business enterprises to
encourage Governments to put in place effective laws and regulations,
implemented and enforced by capable and independent regulators.

The history of regulation is that it evolves from crises to crises, often in

an essentially reactionary mode -- regulatory measures taken after a
financial crises are often reactionary and usually do not solve the
entire problem.

BGR MBA Class of 2015 (Semester IIIB Nov 5 Dec 27, 2014)