ABSTRACT
This chapter introduces the principal economic theories of neo-institutionalism. It shows how pertinent those theories are for understanding the international effects of the crisis on the financial sector and focuses on the managerial consequences of institutional changes for the financial sector. The chapter examines the framework to present the principal effects of the crisis on international financial and supervisory regulation. Transaction costs on the market are costs of seeking and acquiring information, negotiating when information is incomplete and thus leading to a risk of opportunism, and adapting the relationship to changing conditions and unforeseen events. The institutional environment, typified by political, social, economic and legal rules, affects the participants’ transactions and influences their strategic choices, while institutional arrangements refer to the logic of using the rules developed by the economic participants to manage transactions. The new regulatory architecture being put in place for world finance has a more macroeconomic dimension.
