Startseite Law and Macro Finance
Artikel
Lizenziert
Nicht lizenziert Erfordert eine Authentifizierung

Law and Macro Finance

  • M. Konrad Borowicz ORCID logo EMAIL logo
Veröffentlicht/Copyright: 6. November 2024

Abstract

This article makes the case for developing law and macro-finance as an integrated research field that explores the role of credit and its regulation within the economic cycle. It highlights the importance of macro-financial conditions, such as leverage and liquidity, over traditional concerns like agency costs and efficiency when assessing the economic impact of the law. The article argues that the future of law and macro-finance research should focus on demonstrating (1) how the law operates under different macro-financial conditions, (2) how the law can shape these conditions, and (3) how these conditions influence legal frameworks. This research is partly inspired by, and could also be valuable for, organizations like the World Bank and IMF, which increasingly acknowledge the role of debt in financial crises and are beginning to promote policies that help countries better align the size of their credit markets with their economic needs.


Corresponding author: M. Konrad Borowicz, Tilburg Law and Economics Center, Tilburg University, Tilburg, 5000 LE, Netherlands, E-mail:
Parts of this article are derived from my doctoral thesis submitted to Columbia University. I would like to thank an anonymous reviewer at the LDR for helpful comments on an earlier draft of this article. All mistakes that remain are my own.

References

Adrian, Tobias, and Hyun Song Shin, Liquidity, Monetary Policy, and Financial Cycles, 14 Current Issues in Economics and Finance, no. 1 (2008).10.2139/ssrn.1165583Suche in Google Scholar

Allen, Franklin, and Douglas Gale, Bubbles, Crises, and Policy, 15 Oxford Review of Economic Policy, no. 3 (1999).10.1093/oxrep/15.3.9Suche in Google Scholar

Arcand, Jean Louis, Enrico Berkes, and Ugo Panizza, Too Much Finance? 20 Journal of Economic Growth, no. 2 (2015).10.1007/s10887-015-9115-2Suche in Google Scholar

Arrow, Kenneth J., and Gerard Debreu, Existence of an Equilibrium for a Competitive Economy, 22 Econometrica, no. 3 (1954).10.2307/1907353Suche in Google Scholar

Barradas, Ricardo, Financialisation and Real Investment in the European Union: Beneficial or Prejudicial Effects? 29 Review of Political Economy, no. 3 (2017).10.1080/09538259.2017.1348574Suche in Google Scholar

Basel Committee on Banking Supervision, Countercyclical Capital Buffer (CCyB), available at: <https://www.bis.org/bcbs/ccyb/index.htm>, accessed October 6, 2024.Suche in Google Scholar

Bernanke, Ben, Global Imbalances: Recent Developments and Prospects (Berlin, April 21, 2020), available at: <https://www.federalreserve.gov/newsevents/speech/bernanke20070911a.htm>.Suche in Google Scholar

Bernanke, Ben S., Non-Monetary Effects of the Financial Crisis in the Propagation of the Great Depression, 73 The American Economic Review, no. 3 (1983).10.3386/w1054Suche in Google Scholar

Bezemer, Dirk, Josh Ryan-Collins, Frank van Lerven, and Lu Zhang, Credit Where It’s Due: A Historical, Theoretical and Empirical Review of Credit Guidance Policies in the 20th Century, available at: <https://masireqtesad.ir/wp-content/uploads/2019/07/credit-guidance-policies-1.pdf>, accessed February 22, 2022.Suche in Google Scholar

Borio, Claudio, Craig, Furfine, and Philip Lowe, Procyclicality of the Financial System and Financial Stability: Issues and Policy Options, 1 BIS Working Paper (2001).Suche in Google Scholar

Borowicz, M. Konrad, A Theoretical Framework for Law and Macro-Finance, 9 Journal of Financial Regulation, no. 1 (2023).10.1093/jfr/fjac011Suche in Google Scholar

Brock, William A, and Leonard J Mirman, Optimal Economic Growth and Uncertainty: The Discounted Case, 4 Journal of Economic Theory, no. 3 (1972).10.1016/0022-0531(72)90135-4Suche in Google Scholar

Brunnermeier, Markus K., and Isabel Schnabel, “Bubbles and Central Banks: Historical Perspectives.” in Michael D. Bordo, Oyvind Eitrheim, Marc Flandreau, and Jan F. Qvigstad (eds.), Central Banks at a Crossroads (Cambridge: Cambridge University Press, 2016).Suche in Google Scholar

Cecchetti, Stephen, and Enisse Kharroubi, Reassessing the Impact of Finance on Growth, available at: <https://econpapers.repec.org/paper/bisbiswps/381.htm>, accessed March 4, 2022.Suche in Google Scholar

Cerutti, Eugenio, Stijn Claessens, and Luc Laeven, The Use and Effectiveness of Macroprudential Policies: New Evidence, 28 Journal of Financial Stability (2017).10.1016/j.jfs.2015.10.004Suche in Google Scholar

Dafermos, Yannis, Daniela Gabor, and Jo Michell, Institutional Supercycles: An Evolutionary Macro-Finance Approach, 28 New Political Economy, no. 5 (2023).10.1080/13563467.2022.2161497Suche in Google Scholar

Fama, Eugene F., Efficient Capital Markets: A Review of Theory and Empirical Work, 25 The Journal of Finance, no. 2 (1970).10.2307/2325486Suche in Google Scholar

Fisher, Irving, The Debt-Deflation Theory of Great Depressions, 1 Econometrica, no. 4 (1993).10.2307/1907327Suche in Google Scholar

Friedman, Benjamin, The American Economy in Transition (Chicago: University of Chicago Press, 1980).Suche in Google Scholar

Friedman, Milton, and Anna Schwartz, Monetary Statistics of the United States: Estimates, Sources, Methods (New York City: Columbia University Press, 1970).Suche in Google Scholar

Geanakoplos, John, The Leverage Cycle, 24 NBER Macroeconomics Annual (2010).10.1086/648285Suche in Google Scholar

Geanakoplos, John, “Leverage Caused the 2007-2009 Crisis,” in D.W. Arner, E. Avougouleas, D. Busch, and S.L. Schwarcz (eds.), Systemic Risk in the Financial Sector: Ten Years After the Great Crash (Montreal: McGill-Queen’s University Press, 2019).10.2307/j.ctvqmp0vn.18Suche in Google Scholar

Gertler, Mark L., Financial Structure and Aggregate Economic Activity: An Overview, 20 Journal of Money, Credit and Banking, no. 3 (1988).10.2307/1992535Suche in Google Scholar

Gilson, Ronald J., and Reinier Kraakman, Market Efficiency after the Financial Crisis: It’s Still a Matter of Information Costs, 100 Virginia Law Review (2014).10.2139/ssrn.2396608Suche in Google Scholar

Gilson, Ronald J., and Reinier H. Kraakman, The Mechanisms of Market Efficiency, 70 Virginia Law Review, no. 4 (1984).10.2307/1073080Suche in Google Scholar

Gorton, Gary, and Andrew Metrick. 2010. “Regulating the Shadow Banking System,” in G. Gorton, A. Metrick, A. Shleifer, and D.K. Tarullo (eds.), Regulating the Shadow Banking System [with Comments and Discussion] (Brookings Institution Press, 2010).10.2139/ssrn.1676947Suche in Google Scholar

Gorton, Gary, and Guillermo Ordoñez, Collateral Crises, 104 American Economic Review, no. (2014).10.1257/aer.104.2.343Suche in Google Scholar

Grossman, Sanford J., and Oliver D. Hart, One Share-One Vote and the Market for Corporate Control, 20 Journal of Financial Economics (1988).10.1016/0304-405X(88)90044-XSuche in Google Scholar

Gurley, John G., and E. S. Shaw, Financial Aspects of Economic Development, 45 The American Economic Review, no. 4 (1955).Suche in Google Scholar

Jahan, Sarwat, Ahmed, Saber Mahmud, and Chris Papageorgiou, What Is Keynesian Economics? 51 Finance & Development, no. 3 (2014).Suche in Google Scholar

Jensen, Michael C., and William H. Meckling, Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure, 3 Journal of Financial Economics, no. 4 (1976).10.1016/0304-405X(76)90026-XSuche in Google Scholar

Jordà, Òscar, Martin Kornejew, Moritz Schularick, and Alan M. Taylor, Zombies at Large? Corporate Debt Overhang and the Macroeconomy, 35 The Review of Financial Studies, no. 10 (2020).10.3386/w28197Suche in Google Scholar

Kaplan, Steve, and Luigi Zingales, How ‘Law and Finance’ Transformed Scholarship, Debate, available at: <https://review.chicagobooth.edu/magazine/spring-2014/how-law-and-finance-transformed-scholarship-debate>, accessed April 11, 2020.Suche in Google Scholar

Keynes, John Maynard, The General Theory of Employment, Interest and Money (1936).Suche in Google Scholar

Kindleberger, Charles P., Manias, Panics, and Crashes: A History of Financial Crises (New York: Basic Books, 1978).10.1007/978-1-349-04338-5Suche in Google Scholar

Kiyotaki, Nobuhiro, and John Moore, Credit Cycles, 105 Journal of Political Economy, no. 2 (1997).10.1086/262072Suche in Google Scholar

Klein, Michael W., Capital Controls: Gates versus Walls, 2012 Brookings Papers on Economic Activity, no. 1 (2012).10.1353/eca.2012.0015Suche in Google Scholar

Richard C. Koo, The Holy Grail of Macroeconomics: Lessons from Japan’s Great Recession. (Singapore: Wiley, 2009).Suche in Google Scholar

Kydland, Finn E., and Edward C. Prescott, Time to Build and Aggregate Fluctuations, 50 Econometrica, no. 6 (1982).10.2307/1913386Suche in Google Scholar

La Porta, Rafael, Florencio Lopez-De-Silanes, Andrei Shleifer, and Robert W. Vishny, Legal Determinants of External Finance, 52 The Journal of Finance, no. 3 (1997).10.2307/2329518Suche in Google Scholar

La Porta, Rafael, Florencio Lopez-De-Silanes, Andrei Shleifer, and Robert W. Vishny, Law and Finance, 106 Journal of Political Economy, no. 6 (1998).10.1086/250042Suche in Google Scholar

Laeven, Luc, Gabriel Perez-Quiros, and María Dolores Gadea Rivas, Growth-and-Risk Trade-Off, ECB Working Papers, no. 2397, available at: <https://www.ecb.europa.eu/pub/pdf/scpwps/ecb.wp2397∼1119106919.en.pdf>, accessed June 8, 2024.Suche in Google Scholar

Leão, Emanuel Reis, and Pedro Reis Leão, The Paradox of Investment: A Contribution to the Theory of Demand-Led Economic Growth, 36 Review of Political Economy, no. 2 (2024).10.1080/09538259.2022.2062962Suche in Google Scholar

Levine, Ross, Law, Finance, and Economic Growth, 8 Journal of Financial Intermediation, no. 1–2 (1999).10.1006/jfin.1998.0255Suche in Google Scholar

Levine, Ross, “Chapter 12 Finance and Growth: Theory and Evidence,” in P. Aghion and S.N. Durlauf (eds.), Handbook of Economic Growth (Elsevier, 2005).10.1016/S1574-0684(05)01012-9Suche in Google Scholar

Listokin, Yair, Law and Macroeconomics: Legal Remedies to Recessions. (Cambridge, Massachusetts: Harvard University Press, 2019).10.4159/9780674239838Suche in Google Scholar

Lucas, Robert E., Expectations and the Neutrality of Money, 4 Journal of Economic Theory, no. 2 (1972).10.1016/0022-0531(72)90142-1Suche in Google Scholar

Mehrling, Perry, Zoltan Pozsar, James Sweeney, and Daniel Neilson, Bagehot Was a Shadow Banker: Shadow Banking, Central Banking, and the Future of Global Finance, available at: <https://ssrn.com/abstract=2232016>.Suche in Google Scholar

Mian, Atif, and Amir Sufi, House Prices, Home Equity-Based Borrowing, and the US Household Leverage Crisis, 101 American Economic Review, no. 5 (2011).10.1257/aer.101.5.2132Suche in Google Scholar

Minsky, Hyman P., Can “It” Happen Again: Essays on Instability and Finance (New York: M.E. Sharpe, Inc., 1982).10.1080/05775132.1982.11470774Suche in Google Scholar

Mishkin, Frederic, The Household Balance Sheet and the Great Depression, 38 The Journal of Economic History, no. 4 (1978).10.1017/S0022050700087167Suche in Google Scholar

Modigliani, Franco, and Merton H. Miller, Corporate Income Taxes and the Cost of Capital: A Correction, 53 The American Economic Review, no. 3 (1963).Suche in Google Scholar

Mooij, Ruud A. De, Tax Biases to Debt Finance: Assessing the Problem, Finding Solutions, 33 Fiscal Studies, no. 4 (2012).10.1111/j.1475-5890.2012.00170.xSuche in Google Scholar

Moore, Basil J., Horizontalists and Verticalists: The Macroeconomics of Credit Money (Cambridge: Cambridge University Press, 1988).Suche in Google Scholar

Philippon, Thomas, The FinTech Opportunity, National Bureau of Economic Research, no. Working Paper 22476 (2016).10.3386/w22476Suche in Google Scholar

Porta, Rafael La, Florencio Lopez‐De‐Silanes, and Andrei Shleifer, What Works in Securities Laws? 61 The Journal of Finance, no. 1 (2006).10.1111/j.1540-6261.2006.00828.xSuche in Google Scholar

Rey, Hélène, Dilemma Not Trilemma: The Global Financial Cycle and Monetary Policy Independence, National Bureau of Economic Research, no. 21162 (2015).10.3386/w21162Suche in Google Scholar

Ricks, Morgan, The Money Problem: Rethinking Financial Regulation (Chicago: University of Chicago Press, 2016).10.7208/chicago/9780226330464.001.0001Suche in Google Scholar

Stiglitz, Joseph E., and Andrew Weiss, Credit Rationing in Markets with Imperfect Information, 71 The American Economic Review, no. 3 (1981).Suche in Google Scholar

Thiemann, Matthias, Taming the Cycles of Finance? Central Banks and the Macro-Prudential Shift in Financial Regulation (Cambridge: Cambridge University Press, 2024).10.1017/9781009233125Suche in Google Scholar

World Bank, Kose Kose M. Ayhan, Peter Nagle, Franziska Ohnsorge, and Naotaka Sugawara, Global Waves of Debt, available at: <http://hdl.handle.net/10986/32809>, accessed October 6, 2024.Suche in Google Scholar

Received: 2024-06-26
Accepted: 2024-09-28
Published Online: 2024-11-06
Published in Print: 2025-02-25

© 2024 Walter de Gruyter GmbH, Berlin/Boston

Heruntergeladen am 28.9.2025 von https://www.degruyterbrill.com/document/doi/10.1515/ldr-2024-0091/html
Button zum nach oben scrollen