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14 J. Banking Reg. 1 (2013)

handle is hein.journals/jlbkrg14 and id is 1 raw text is: Original Article Financial and regulatory failure: The case of Ireland Kenneth Patrick Vincent O'Sullivan is a PhD student in the Kemmy Business School at the University of Limerick, Ireland and member of the FS Regulatory Centre of Excellence at PricewaterhouseCoopers in London, UK. He has previously worked in economic and research positions for the Industrial Development Agency Ireland, Forfds and Bank of Scotland. His main research focus is on investigating the interaction between financial regulation and macroeconomic cycles. He holds an MSc Regulation (Research) from the London School of Economics, an MEconSc from the National University of Ireland, Galway and a BA in Business Studies from the University of Limerick. Stephen Kinsella is a lecturer in Economics in the Kemmy Business School at the University of Limerick, Ireland. He is the author of four books: Ireland in 2050: How we will be Living, Understanding Ireland's Economic Crisis: Prospects for Recovery, Quick Win Economics and Computable Economic. He has a BA in Economics and Mathematics from Trinity College, Dublin, an MEconSc, MA and PhD in Economics from National University of Ireland, Galway. He also holds an MPhil and PhD in Economics from the New School for Social Research in New York. His research spans the area of computable economics, health economics and experimental economics. Correspondence: Kenneth Patrick Vincent O'Sullivan, Department of Economics, Kemmy Business School, University of Limerick, Limerick, Ireland E-mail: kpvosullivan @gmail.com ABSTRACT The article chronicles the evolution of financial regulation in Ireland, with particular attention given to the roles, responsibilities and actions of those authorities responsible for maintaining financial stability. It examines the role of financial regulation during the property bubble and subsequent bust, in particular, the huge increase in property-backed lending, which fuelled its growth during the mid-2000s and contributed to one of the largest banking failures experienced by a developed country since the great depression. We investigate the impact of ongoing government support to the banking system and the damage that has been done to public finances since the banking crisis. Journal of Banking Regulation (2013) 14, 1-15. doi:10.1057/jbr.2011.30; published online 18 January 2012 Keywords: 2008 banking crisis; regulatory failure; Ireland; principles-based regulation; public debt INTRODUCTION Ireland is experiencing a deep financial and economic crisis, rooted in a contraction in residential and commercial property markets combined with a sharp decline in economic activity. The crisis is mainly domestic in nature and can be traced to the liberalisation of financial regulation during the 1990s, the adoption of principles-based regulation (PBR) during the start of the property boom and expansionary fiscal policy propagated by a series of governments, which stoked the property bubble. Following the crash in property prices, which have fallen by over 50 per cent since its peak, the balance sheets' of Irish banks have been severely damaged. Its binge on property- related lending has resulted in its capital base being destroyed, and decades of steady progress and integrity eroded in just a few years. Market © 2013 Macmillan Publishers Ltd. 1745-6452 Journal of Banking Regulation Vol. 14, 1, 1-15 www.palgrave-journals.com/jbr/

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