Financial stability as the goal of post-crisis regulatory reforms

Algis Dobravolskas, Jusif Seiranov

Abstract


The article analyses the reasons of financial instability, which outburst in 2007-2008 crisis and studies the ways of rebuilding financial stability in the process of post-crisis regulatory reforms. The authors consider mostly institutional aspects of the problem. Violation of stability is viewed on the one hand as the result of deregulation processes in major financial markets since 1980s, on the other hand as result of inadequacy of national micro-prudential regulators to match the cross-sector and cross-border activities of so called “too big to fail” financial institutions. The article studies how these targets are met in post-crisis regulatory reforms, analysing institutional frameworks introduced in USA with the pass of Dodd-Frank Act and in the European Union after adopting the new architecture of financial markets supervision and regulation. The impact of these reforms on regulation of financial markets in Lithuania is assessed.

Keywords


financial stability; financial crisis; systemic risk; regulatory reform; macro-prudential and micro-prudential supervision

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"Business Systems & Economics" ISSN online 2029-8234