Publication

This paper argues that governments are shifting from the padding of banks' profits towards a prudential system of financial regulation. The authors argue that although few governments can afford to prevent domestic firms from accessing funds on world markets, they also do not want the decay of protective measures to leave the banking system exposed to global competition. As a result, the authors explain, governments are requiring banks to hold more equity capital, to manage risk better and to disclose their books to closer market scrutiny.