Abstract: 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, in general, seem to incur substantially higher regulatory costs than do
civil law jurisdictions.
The paper also presents some additional evidence about the level of regulatory intensity in
the area of securities regulation by reporting data on public and private securities enforcement
actions in the United States in recent years, including data on both monetary and non-monetary
sanctions. Compared to at least the United Kingdom and Germany, the intensity of securities
enforcement actions in the United States appears to be strikingly higher. Not only are there more
financial regulators in the United States, but they carry bigger sticks than their foreign counterparts.
While law on the books may be converging, the level of enforcement efforts seems to vary widely
across national boundaries and even within the regions, such as Europe.
The paper concludes with some thoughts about additional lines of research in this area and
then touches briefly upon the implications of my data for the debate over regulatory convergence
and for future lines of research.