The Structure of Financial Supervision: Consolidation or Fragmentation for Financial Regulators?

This research was designed to answer the question of which direction the restructuring of financial regulators should take – consolidation or fragmentation. This research began by examining the need for financial regulation and its related costs. It then continued to describe what types of regulatory structures exist in the world; surveying the regulatory structures in 15 jurisdictions, comparing them and discussing their strengths and weaknesses. This research analyzed the possible regulatory structures using three methodological tools: Game-Theory, Institutional-Design, and Network-Effects. The incentives for regulatory action were examined in Chapter Four using game theory concepts. This chapter predicted how two regulators with overlapping supervisory mandates will behave in two different states of the world (where they can stand to benefit from regulating and where they stand to lose). The insights derived from the games described in this chapter were then used to analyze the different supervisory models that exist in the world. The problem of information-flow was discussed in Chapter Five using tools from institutional design. The idea is based on the need for the right kind of information to reach the hands of the decision maker in the shortest time possible in order to predict, mitigate or stop a financial crisis from occurring. Network effects and congestion in the context of financial regulation were discussed in Chapter Six which applied the literature referring to network effects in general in an attempt to conclude whether consolidating financial regulatory standards on a global level might also yield other positive network effects. Returning to the main research question, this research concluded that in general the fragmented model should be preferable to the consolidated model in most cases as it allows for greater diversity and information-flow. However, in cases in which close cooperation between two authorities is essential, the consolidated model should be used.

Il conflitto tra ragione e passioni nel pensiero morale, economico e politico di Bernard Mandeville

Effects of the conflict between reason and passion in Bernard Mandeville’s moral, economic and political thought My PhD dissertation focuses on Bernard Mandeville (1670-1732), a Dutch philosopher who moved to London in his late twenties. The aspect of Mandeville’s thought I take into account in my research is the conflicting relation between reason and passions, and the consequences that Mandeville’s view of this conflict has in the development of his theory of human nature which, I argue, is what grounds his moral, economic and, above all, political theory. According to Mandeville, reason is fundamentally weak. Passions influence with more strength human actions, and, eventually, are the ones which motivate them. The role of reason is merely instrumental, restricted to finding appropriate means in order to reach the desired ends, which are capricious and inconstant, since they all come from unstable passions. Reason cannot take decisions meant to act in the long term, pursuing an object which has not a selfish and temporary nature. There is no possibility, thus, that men’s actions aim just to achieve a good and just society, without their interests being directly involved. The basically selfish root of every desire leads Mandeville to claim that there is neither benevolence nor altruism which guides human behaviour. Hence he expresses a judgement on the moral character of human beings, always busy with their self-satisfaction, and hardly ever considering what would be good on a wider perspective, including other people’s sake. The anthropological features ascribed to men by Mandeville, are those which lead him to prefer a political system where governors are not supposed to have particular abilities, either from an intellectual or from a moral point of view, and peace and order are preserved by the bureaucratic machine, which is meant to work with the least effort on the part of the politicians, and no big harm can be done even by corrupted or wicked governors. This system is adopted with an eye at remedying human deficiencies: Mandeville takes into primary account, when he thinks of how to build a peaceful and functioning society, that everyone is concerned with his selfish interest, and that the rationality of a single politician, or of a group of them belonging to a same generation, cannot find a good “solution” to govern men able to last over the long period, and to work in different ages. This implies a refusal of the Hobbesian theory of the pactum subjectionis, which has the character of a rational and definitive choice, and leads Mandeville to consider the order which arises spontaneously, without any plan or rational intervention.