Financial market failures and public intervention.

Summary The articles in this thesis analyze the financial market failures traditionally identified by economists (associated with externalities, information asymmetries and market incompleteness) and the responses of public authorities. A central observation is that public interventions are almost never the result of a cold analysis of these market failures, but are decided upon in an emergency to respond to the most obvious dysfunctions observed during a crisis. This pragmatic and a-theoretical approach leads to poorly calibrated interventions. In particular, these articles attack the lender-of-last-resort policy that encourages short-term indebtedness of financial institutions and feeds systemic risk. They also highlight the risks of some of the reforms introduced in the wake of the subprime crisis. Governments should focus on providing the public goods clearly identified by economic analysis (control of "agents" and information), and not multiply hazardous interventions that sometimes create more market imperfections than they claim to solve.