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  1. Home
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  3. American Economic Review
  4. May 2012
  5. Three Principles for Market-Based Credit Regulation

Three Principles for Market-Based Credit Regulation

  • Perry Mehrling
American Economic Review
vol. 102, no. 3, May 2012
(pp. 107-12)
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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.102.3.107

JEL 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