Malaysia's financial system should be tailored according to the needs of users here, instead of following what is being done in advanced economies, a leading British economist.
Prof John Kay, who is a visiting professor of economics from the London School of Economics, said the financial system must understand and develop a model that suits the needs of customers.
"A lot of what has happened in terms of increased complexity and the detailed regulation in the West for the last 30 years has resulted in something undesirable.
"That is a route to not follow," he told reporters after speaking at the Asian Institute of Finance (AIF) Distinguished Speakers Series 2016 here, on Tuesday.
Citing an example, Kay said the 2003-2008 credit expansion followed by the credit crunch in the United States, was caused by regulations that were too complex.
He also argued that the financial sector had grown too large, becoming detached from ordinary business and everyday life, thus becoming an industry that mostly trades with itself.
He said the financial system needs a regulatory philosophy which focused on the structure of the industry and the people in it.
"As for the structure, it must be simple, have direct chains of intermediations and focuses on the particular needs of users of financial services.
"Perhaps we (the West) did not get it quite right. The main lesson is not to assume we got it right and develop a system which caters to real needs of the users," he added.
Bernama
Tue Jan 19 2016
Prof John Kay also argued that the financial sector had grown too large, becoming detached from ordinary business and everyday life.
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