Optimal financial regulation in the European Union: a further investigation of Marianne Ojos theory

Abstract

In todays harmonised European society, the importance of successful financial risk taking abilities and theirsubsequent governance is a current topic of discussion. The purpose of this paper is to test existing regulatory theories, and provide a framework for future research. Using Marianne Ojos theory (Ojo2010, 2011), this research attempts to answer the following research question: To what extent should the EU intervene in financial risk taking abilities at financial institutions? Using a deductive, qualitative research, five semi-structured face-to-face interviews were conducted. All interviewees have experience working for a financial institution in the City of London. All interviewees were of Dutch, Dutch/American or British origin. The study has identified two main findings.First, the EU is (currently) not capable of regulating the European financial institutions as a whole. Second, optimal regulation is a mixture between self-regulation and government regulation, favouring the self-regulation side. This finding forms the basis of the model of optimal regulation that slightly differs from the theories as discussed by Ojo. The paper concludes with further research avenues stemming from the adjusted model. As the model is an approach to optimal regulation, it still needs to be tested to find the precise point of this form. It is recommended to adopt an economical scientific approach to conduct further research into the proposed model and subsequent theories.