Abstract
Procyclicality occurs because of herd behavior of market participants. But that behavior could occur because of obsolete or badly drafted regulations that encourage such behavior. Hence, regulators need to be aware that financial regulations and their enforcement (or non-enforcement in many markets) have behavioral impact on markets.
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© 2006 International Monetary Fund
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Sheng, A. (2006). Comments on “Procyclical Financial Behavior: What Can Be Done?”. In: Gerlach, S., Gruenwald, P. (eds) Procyclicality of Financial Systems in Asia. Procyclicality of Financial Systems in Asia. Palgrave Macmillan, London. https://doi.org/10.1057/9781137001535_12
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DOI: https://doi.org/10.1057/9781137001535_12
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-0-230-54700-1
Online ISBN: 978-1-137-00153-5
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