, Volume 86, Number 3

Andrew Baker
A growing number of respected commentators now argue that regulatory capture of public agencies and public policy by leading banks was one of the main causal factors behind the financial crisis of 2007-2009, resulting in a permissive regulatory environment. This regulatory environment placed a faith in banks' own internal risk models, contributed to pro-cyclical behaviour and turned a blind eye to excessive risk taking. The article argues that a form of 'multi-level regulatory capture' characterized the global financial architecture prior to the crisis.

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