Variation in the intensity of financial regulation

"Given all the talk of regulatory convergence in financial markets, one would think that good data would be available regarding the actual intensity of financial regulation in developed countries as well as a robust literature about how to determine the optimal level of regulatory intensity for financial markets and financial institutions. As it turns out, neither data nor theories are well developed on these topics. In this paper, I discuss first the considerable difficulties of conducting a theoretically complete analysis of costs and benefits in the area of financial regulation as well as the problems associated in making international comparisons between the observed levels of the intensity of financial regulation across national boundaries. Notwithstanding these difficulties, I proceed to present some data about direct regulatory costs of financial regulation in the United States and then engage in some preliminary international comparisons. Even after making adjustments for the size of U.S. financial markets, the costs of financial regulation in the United States are substantially higher than the costs observed in most other jurisdictions. Moreover, common law jurisdictions,