Abstract:
The frequency of financial crises in the last 20 years can be attributed to the lack of a comprehensive theory
of financial regulation to guide policy makers. Existing theories fail to define the range of regulatory models,
the causes of regulatory failure, and how to measure and prevent it. Faulty design of regulatory models, and
the lack of ongoing performance monitoring incorporating early warning systems, is disrupting economic
and social development. The new theory illustrates the necessity for a staged approach to liheratisation,
which first assesses the capacity to conduct effective prudential supervision. before attempts are made to
remove protective measures.
