Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/178650
Authors: 
Friedrich, Jan
Thiemann, Matthias
Year of Publication: 
2018
Series/Report no.: 
SAFE Policy Letter No. 69
Abstract: 
This policy letter provides evidence for the crucial importance of the initial regulatory treatment for the further development of financial innovations by exploring the emergence and initial legal framing of off-balance-sheet leasing in Germany. Due to a missing legal framework, lease contracts occurred as an innovative social practice of off-balance-sheet financing. However, this lacking legal framing impeded the development of this financial innovation as it also created legal uncertainties. This was about to change after the initial legal framing of leasing in the 1970's which eliminated those legal uncertainties and off-balance-sheet leasing entered into a stunning period of growth while laying the foundation of a regulatory resiliency against efforts that seek to abandon the off-balance-sheet treatment of leases. As the initial legal framing is crucial for the further development of a financial innovation, we propose the French approach for the initial vindication of new financial products in which the principles-based rules are aligned with the capabilities of regulators to intervene, even when a financial innovation complies with the letter of the law. In this way, regulators could regulate the frontier of financial innovations and weed out those which are entirely or mainly driven by regulatory arbitrage considerations while maintaining the beneficial elements of those products.
Subjects: 
financial innovations
regulation
regulatory arbitrage
leasing
Persistent Identifier of the first edition: 
Document Type: 
Research Report

Files in This Item:
File
Size
279.42 kB





Items in EconStor are protected by copyright, with all rights reserved, unless otherwise indicated.