Financial crisis regulatory Essay Example | Topics and Well Written Essays - 2000 words

Financial crisis regulatory - Essay Example Robert Shiller examined the controversy of the global economic crisis and its management and raised prudent arguments about the practice. The economist argues that democratization of finance provides an ideal strategy of managing the contemporary and future economic crisis. Some analysts support Shiller’s perspective while others have criticized his ideology. Interestingly, few economists argue that the financial regulations adopted by the OECD countries are sufficient in containing financial crisis (Gray & Akseli, 2011 p. 2). Considering the magnitude of the idea of global financial crisis management, there is a need of developing knowledge of ideal approaches of managing the problem. This article provides an analysis of the debate started by Shiller concerning democratizing finance while comparing the argument with the types of regulatory measures practiced by the OECD countries. The Shiller’s perspective on financial crisis Shiller explores the importance of moral re putation of finance institutions in management of economic crisis. After the 2008 global economic recession, anger expressed itself in objections around the world. People constantly criticized how powerful profit oriented social-economic procedures have influenced financial institutions. The Occupy movement staged serious actions challenging the relationship between the government and businesses. A clear insight was that individuals responsible for the crisis would revitalize their moral reputations by adopting acceptable financial procedures (Kroszner, Shiller & Friedman, 2011 p. 4). Shiller has popularized an idea that economists need to reclaim the finance for the common good instead of condemning it. He argues that finance is a powerful tool that the society can utilize in solving its problem and in developing its general welfare. The global economy needs more finance but not less and the finance should facilitate the attainment of the society’s goals (Tropeano, 2011 p. 5 ). Consequently, the analyst emphasizes the need of rethinking about finance and its responsibility in the society. Particularly, Shiller claims that financial management should not merely include the manipulation of money or control of risks but should mainly involve the stewardship of community’s assets. The economist highlights how individuals serving in the financial careers can manage, safeguard and increase the public assets. Moreover, the analyst explains how finance has contributed to the good of the society through inventions, savings accounts, mortgage and pensions. Consequently, Shillers insists that economists and policy makers should devise new strategies for rechanneling financial creativity to benefit global economies (Princeton University, 2012 p. 1). Previous regulations schemes have targeted restricting the financial sector by slowing down the development of lending or trading. However, Shiller’s alternative believes that this ideology is unproductive especially in the current dynamic industry that presents high degrees of dynamism. The Shiller’s model values the importance of creativity, personal morality, education and effect of finance on the people’s lives (Princeton University, 2012 p. 1). Shiller supports the present financial regulation system arguing that although the system is imperfect, it plays a significant role in stabilizing the global economy.