Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Saturday, January 29, 2011

Schwarcz on Ex Ante Versus Ex Post Approaches to Financial Regulation

Keynote & Chapman Dialogue Address: Ex Ante Versus Ex Post Approaches to Financial Regulation, by Steven L. Schwarcz, Duke University - School of Law, was recently posted on SSRN.  Here is the abstract:

Ideal financial regulation would work ex ante, to prevent financial failures. Once a failure occurs, there may already be economic damage, and it may be difficult to stop the failure from spreading and becoming systemic. The reality, though, is that preventing financial failures should be only one role for regulators. Even an optimal prophylactic regulatory regime cannot anticipate and prevent every failure. This paper, which formed my Chapman Dialogue Address at Chapman University School of Law and the keynote speech at Chapman Law Review’s 2011 Symposium on the Future of Financial Regulation, attempts to contrast fundamental differences between ex ante and ex post financial regulation. It also illustrates how ex post approaches can, and arguably should, supplement ex ante approaches as part of a comprehensive financial regulatory framework.

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