Why the best financial regulations are born from stability, not from market crises
In short: Financial bubbles are a recurring feature of capitalism, but regulatory attempts to stop them often inadvertently plant the seeds for the next crash. This lecture examines the historical cycle of market manias and argues that effective oversight is best crafted during periods of calm rather than in the heat of a crisis.
Professor D'Maris Coffman explores the 300-year history of financial bubbles, tracing the pattern from the South Sea Bubble and the Mississippi Scheme to modern times. The lecture highlights a persistent paradox: regulators frequently react to past failures by implementing new rules that ultimately facilitate future instability.
The analysis suggests that the most robust regulatory frameworks are those developed during the normal, stable operation of markets. Gresham College, which has provided free public lectures since 1597, hosts this discussion as part of its ongoing mission to share academic insights with the public.
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Sources
- Summary by Intellect · source: Bubbles, Manias and Market Failures: The Unintended Consequences of Regulatory Responses
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