Indirect regulation minimizes regulatory expense by relying on the private sector risk practices of counterparties and creditors, producing an equilibrium between regulatory cost and regulatory attainment.
Source quote, verbatim
Relying on private sector practices by counterparties and creditors minimizes regulatory expenses significantly. Indirect regulation enables a state of equilibrium between costs and attainments of regulatory initiatives.
Kaal, Indirect Regulation of Hedge Funds (2019). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3405660
Holds when
counterparties and creditors actually maintain disciplined private sector practices
Classification
mechanismsupport: arguedrisk-and-incentives
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