Changing the Paradigm of Financial Market Regulation
The modern financial market is a complex and dynamic mechanism that is being rapidly digitalized, new innovative technologies are emerging that change the nature of financial business and the relations between participants. All these phenomena expand the range of challenges and risks, and the threat...
| Main Authors: | , , , |
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| Format: | Article |
| Language: | English |
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Research Centre of Industrial Problems of Development of NAS of Ukraine
2022-02-01
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| Series: | Bìznes Inform |
| Subjects: | |
| Online Access: | https://www.business-inform.net/export_pdf/business-inform-2022-2_0-pages-89_97.pdf |
| _version_ | 1818552436370964480 |
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| author | Prymostka Liudmyla O. Krasnova Iryna V. Prymostka Olena O. Shevaldina Valentyna H. |
| author_facet | Prymostka Liudmyla O. Krasnova Iryna V. Prymostka Olena O. Shevaldina Valentyna H. |
| author_sort | Prymostka Liudmyla O. |
| collection | DOAJ |
| description | The modern financial market is a complex and dynamic mechanism that is being rapidly digitalized, new innovative technologies are emerging that change the nature of financial business and the relations between participants. All these phenomena expand the range of challenges and risks, and the threat of their implementation causes the need to change the paradigm of regulation of the financial market. A review of expert studies and conclusions showed that traditional prudential regulation mechanisms are not able to take into account the currrent changes and challenges. The article is aimed at forming a holistic view of determinants and challenges that lead to the need to change the paradigm of financial market regulation, as well as substantiation of the components of the new model of consolidated regulation and supervision. The necessity of forming a risk-oriented model of proportional regulation, focused on preventing growing threats and challenges of the digitalized financial market and its stabilization, is substantiated. It is specified that the evolution of approaches to regulation took place with different dynamics – from simple to synergistic, from adaptive to bifurcation-based, from limited to inclusive. The main determinants of the changes are asserted the following: financial and digital globalization, deregulation, development of information-communication technologies and innovations, digitalization of the market, volatility of market parameters, system risks. It is substantiated that the paradigm shift should take place on the principle of complementarity of traditional monetary policy, prudential and macroprudential regulation on the basis of consolidated supervision and the suptech (Supervisory Technologies). The basis of the new consolidated regulatory model should be a risk-oriented proportional approach that focuses on the volumes and levels of risks taken by different financial institutions. At that, it is expected that the proportionality of regulatory requirements depending on the types of instruments, operations and the level of risk taken will contribute to ensuring market stability, protecting consumers of financial services and stimulating the development of financial business. Prospect for further research is to substantiate the methods and instruments of a proportional risk-oriented regulation. |
| first_indexed | 2024-12-12T09:13:10Z |
| format | Article |
| id | doaj.art-1e2ae81aff94416f836081a91762a20a |
| institution | Directory Open Access Journal |
| issn | 2222-4459 2311-116X |
| language | English |
| last_indexed | 2024-12-12T09:13:10Z |
| publishDate | 2022-02-01 |
| publisher | Research Centre of Industrial Problems of Development of NAS of Ukraine |
| record_format | Article |
| series | Bìznes Inform |
| spelling | doaj.art-1e2ae81aff94416f836081a91762a20a2022-12-22T00:29:27ZengResearch Centre of Industrial Problems of Development of NAS of UkraineBìznes Inform2222-44592311-116X2022-02-012529899710.32983/2222-4459-2022-2-89-97Changing the Paradigm of Financial Market RegulationPrymostka Liudmyla O.0https://orcid.org/0000-0001-5490-2112Krasnova Iryna V.1https://orcid.org/0000-0002-4507-6629Prymostka Olena O.2https://orcid.org/0000-0002-5887-7951Shevaldina Valentyna H.3https://orcid.org/0000-0001-7496-1443Kyiv National Economic University named after V. HetmanKyiv National Economic University named after V. HetmanKyiv National Economic University named after V. HetmanKyiv National Economic University named after V. HetmanThe modern financial market is a complex and dynamic mechanism that is being rapidly digitalized, new innovative technologies are emerging that change the nature of financial business and the relations between participants. All these phenomena expand the range of challenges and risks, and the threat of their implementation causes the need to change the paradigm of regulation of the financial market. A review of expert studies and conclusions showed that traditional prudential regulation mechanisms are not able to take into account the currrent changes and challenges. The article is aimed at forming a holistic view of determinants and challenges that lead to the need to change the paradigm of financial market regulation, as well as substantiation of the components of the new model of consolidated regulation and supervision. The necessity of forming a risk-oriented model of proportional regulation, focused on preventing growing threats and challenges of the digitalized financial market and its stabilization, is substantiated. It is specified that the evolution of approaches to regulation took place with different dynamics – from simple to synergistic, from adaptive to bifurcation-based, from limited to inclusive. The main determinants of the changes are asserted the following: financial and digital globalization, deregulation, development of information-communication technologies and innovations, digitalization of the market, volatility of market parameters, system risks. It is substantiated that the paradigm shift should take place on the principle of complementarity of traditional monetary policy, prudential and macroprudential regulation on the basis of consolidated supervision and the suptech (Supervisory Technologies). The basis of the new consolidated regulatory model should be a risk-oriented proportional approach that focuses on the volumes and levels of risks taken by different financial institutions. At that, it is expected that the proportionality of regulatory requirements depending on the types of instruments, operations and the level of risk taken will contribute to ensuring market stability, protecting consumers of financial services and stimulating the development of financial business. Prospect for further research is to substantiate the methods and instruments of a proportional risk-oriented regulation.https://www.business-inform.net/export_pdf/business-inform-2022-2_0-pages-89_97.pdffinancial marketinnovationssystem risksfintechdigitalizationrisk-oriented regulation and supervisionproportionality |
| spellingShingle | Prymostka Liudmyla O. Krasnova Iryna V. Prymostka Olena O. Shevaldina Valentyna H. Changing the Paradigm of Financial Market Regulation Bìznes Inform financial market innovations system risks fintech digitalization risk-oriented regulation and supervision proportionality |
| title | Changing the Paradigm of Financial Market Regulation |
| title_full | Changing the Paradigm of Financial Market Regulation |
| title_fullStr | Changing the Paradigm of Financial Market Regulation |
| title_full_unstemmed | Changing the Paradigm of Financial Market Regulation |
| title_short | Changing the Paradigm of Financial Market Regulation |
| title_sort | changing the paradigm of financial market regulation |
| topic | financial market innovations system risks fintech digitalization risk-oriented regulation and supervision proportionality |
| url | https://www.business-inform.net/export_pdf/business-inform-2022-2_0-pages-89_97.pdf |
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