The latest issue of the Bank of Canada’s Financial System review concludes that there is no conclusive evidence of the ideal regulatory model for financial markets.

Two researchers, Christine Fay and Nicolas Parent, surveyed the literature on the organizational structure of market regulation, considering arguments in favour of a single regulator versus regulatory competition. And, it concludes that there is little practical evidence on either side of the debate.

They note that the theoretical pros and cons of concentrating regulatory power in one or just a few regulatory bodies are well known, but that “research on the practical implications is still in its infancy.”

On the flip side, it notes that “academics have made a number of strong theoretical arguments with respect to the benefits of greater regulatory competition, but little research has been done on its impact in practice.”

“Many questions remain unanswered, and economic theory seems to provide limited guidance as to how to organize the complex world of securities regulation,” it concludes. “As more data are collected from countries that have implemented reforms, future research and empirical studies should shed more light on these issues.”