History of Financial Regulation in Australia, United States, and United Kingdom

History of Financial Regulation in Australia, United States, and United Kingdom

DOI: 10.4018/978-1-4666-5950-6.ch002

Abstract

The economic hypotheses and policy stances of each of the various economic schools of thought carry over to theories of financial regulation. The empirical cases observed in the US, UK and Australia show the unravelling of financial stability by the see-saw between command-and-control and voluntary forms of self-regulation. This chapter traces the pertinent events with a focus on the regulatory changes during and after the 1980s.
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Pre-Deregulation Period In The Us, Uk, And Australia

During the pre-deregulation period, the interest rates that banks could charge on loans and pay on deposits was tightly controlled within narrow bounds. Banks were subject to directives on the overall quantity of loans and there was moral persuasion in relation to industries to which loans should or should not be made. Furthermore, financial institutions were highly specialized, with trading banks lending to businesses, saving banks to households, and finance companies focussing on generally riskier property loans and consumer credit.

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