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Public interest theory : ウィキペディア英語版 | Public interest theory
Public interest theory is an economic theory first developed by Arthur Cecil Pigou〔Pigou, A. C. (1932) The Economics of Welfare. London: Macmillan and Co.〕 that holds that regulation is supplied in response to the demand of the public for the correction of inefficient or inequitable market practices. Regulation is assumed initially to benefit society as a whole rather than particular vested interests.〔Deegan, C., Unerman, J. (2011) Financial Accounting Theory. Maidenhead: McGraw-Hill Education.〕 The regulatory body is considered to represent the interest of the society in which it operates rather than the private interests of the regulators.〔Richard A. Posner, Theories of Economic Regulation, The Bell Journal of Economics and Management Science, Vol. 5, No. 2 (Autumn, 1974), pp. 335-358〕 ==Assumptions== This theory assumes that markets are extremely fragile and apt to operate very inefficiently (or inequitably) if left alone. The government is assumed to be a neutral arbiter. The public interest view holds that governments regulate banks to facilitate the efficient functioning of banks by ameliorating market failures, for the benefit of broader civil society. In banking, the public interest would be served if the banking system allocated resources in a socially efficient manner (i.e. “maximizing output and minimizing variance”〔Misham, E. J. (1969) Welfare Economics: An assessment (Amsterdam and London: North Holland publishing company.〕 ) and performed well other functions of finance.〔Levine (1997) notes that these other functions consist of facilitating payments, mobilising and pooling savings from disparate savers, allocating capital, monitoring firms and managers, and providing tools for the management and trading of a variety of risk.〕
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