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The carrot or the stick: Finding a balance in the regulatory conundrum

Hillman, Henry



The financial crisis has attracted comment from a wide variety of academics; Niall Ferguson is one such example, a historian commenting on a legal issue. Ferguson called for the jailing of bankers in his Reith lecturers for Radio 4 in 2012; such a measure will find support with many commentators and would fit within a deterrence based approach to regulating the financial system. This paper seeks to compare the deterrence based and compliance based approaches, assessing their application in the UK and the US. The approaches are defined based on research by Aires and Braithwaite, as well as Dalvinder Singh; both approaches are considered in turn and a combination of the two approaches can then be identified within the UK and US. Recent examples of enforcement are used to demonstrate the approaches in practice, identifying both the advantages and disadvantages. On assessment the paper concludes that no one approach should be adopted, both should be implemented in moderation in order to gain the most advantage from each. It will also be argued that the enforcement measures in place are unfulfilling and that a wider range of sanctions should be sought.


Hillman, H. (2013). The carrot or the stick: Finding a balance in the regulatory conundrum

Journal Article Type Article
Acceptance Date Feb 1, 2013
Online Publication Date May 24, 2013
Publication Date Mar 24, 2013
Journal Financial Regulation International
Peer Reviewed Not Peer Reviewed
Keywords carrot, stick, balance, regulatory conundrum
Publisher URL


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