American Economic Review
ISSN 0002-8282 (Print) | ISSN 1944-7981 (Online)
Three Principles for Market-Based Credit Regulation
American Economic Review
vol. 102,
no. 3, May 2012
(pp. 107–12)
Abstract
A key lesson of the financial crisis 2007-09 is that the Bagehot Rule, "lend freely but at a high rate," needs to be updated for the emerging market-based credit system. A modern rule is suggested: Markets, not Banks; Outside spread, not Inside spread; Core, not Periphery.Citation
Mehrling, Perry. 2012. "Three Principles for Market-Based Credit Regulation." American Economic Review 102 (3): 107–12. DOI: 10.1257/aer.102.3.107JEL Classification
- G21 Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
- L51 Economics of Regulation
- E32 Business Fluctuations; Cycles
- E44 Financial Markets and the Macroeconomy
- G28 Financial Institutions and Services: Government Policy and Regulation