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Economic Commentary

A Market-Based Approach to Regulatory Reform

Regulatory requirements and prohibitions impose significant, although sometimes unintended, taxes on the business of banking. As with all business taxes, the true burden is shared jointly by investors in the form of reduced market valuations of their investment, by employees in the form of lower real wages, and by customers — in this case, in the form of higher interest paid on loans and lower interest received on savings.

The views authors express in Economic Commentary are theirs and not necessarily those of the Federal Reserve Bank of Cleveland or the Board of Governors of the Federal Reserve System. The series editor is Tasia Hane. This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. This paper and its data are subject to revision; please visit for updates.

Suggested Citation

Jordan, Jerry L. 1993. “A Market-Based Approach to Regulatory Reform.” Federal Reserve Bank of Cleveland, Economic Commentary 3/15/1993.