Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/312369 
Year of Publication: 
2023
Citation: 
[Journal:] The Central European Review of Economics and Management (CEREM) [ISSN:] 2544-0365 [Volume:] 7 [Issue:] 2 [Year:] 2023 [Pages:] 41-66
Publisher: 
WSB Merito University in Wrocław, Wrocław
Abstract: 
Aim: In this paper, it is argued that in complex financial systems private goods, important for the creation of a market, have to be considered in a multiple of differing property rights structures necessary for the functioning of the system. This may lead to high transaction costs and adverse incentives for different players, threatening the sustainability of the system. The aim of the article is to create and explore a framework for assessing fragilities and threats to the sustainability of financial markets, using a property rights approach. This may be a useful background for development of policy to increase the sustainability of financial markets. Conclusions/findings: It is argued that while financial services have features of a private good for which markets exist, the infrastructure and organizational structures have features of a club good. These are characterized by problems of congestion and depreciation due to its overuse. The question is addressed to what extent the public good features are of the "weakest-link" kind, where fragilities may lead a potential collapse. Implications of the research: The complex financial system should be prevented from getting too many features of an open access regime, while making it a self-strengthening system where failures have learning effects. This may require the increase of different types of buffers and limits to the size of the players in the financial system. Otherwise, any action that is thought to lead to an improvement, is likely to lead to have the opposite effect.
Subjects: 
financial markets
complexity
public goods
club goods
property rights
sustainability
JEL: 
D23
E42
G1
G2
Persistent Identifier of the first edition: 
Creative Commons License: 
cc-by-nc-nd Logo
Document Type: 
Article

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