Systemic risk & market integrity

From its creation, the Center on Finance, Law & Policy has been grounded in advancing academic research to understand the causes of past financial crises and to prevent the next one.

Our interdisciplinary work to promote a stable and fair financial system examines systemic risks and opportunities. Michigan faculty and students are studying AI market manipulation, regulatory structures surrounding cryptocurrency and blockchain, cybersecurity, and the challenges and rewards big data offers. Through our conferences, we cut across silos and bring people together to discuss new ideas. We write academic papers, engage students across disciplines, and actively engage with regulators and policymakers to expand knowledge around these issues.

Model describing simulator

Algorithmic market manipulation

Led by Michigan Engineering, the AI Financial Market Manipulation project represents a multidisciplinary effort to modernize enforcement mechanisms against manipulative trading activity in large capital markets. The project aims to develop new and robust strategies for detecting and enforcing against novel forms of market manipulation.
Learn more about the project

At Michigan, the Center on Finance, Law & Policy brings together exceptional scholars from across the University to study systemic risk and market integrity from interdisciplinary perspectives. Our work is helping regulators to mitigate risk, reduce market distortions, and help make the financial system safer and fairer.

Michael S. Barr, Co-Faculty Director of the Center on Finance, Law & Policy
Faculty expert

Jeremy Kress examines regulations to mitigate nonbank systemic risk

The recent financial crisis demonstrated that, contrary to longstanding regulatory assumptions, nonbank financial firms—such as investment banks and insurance companies—can propagate systemic risk throughout the financial system. Kress argues entity regulation should be used as a complement to activity regulation for mitigating nonbank systemic risk.
You can read his paper in the Southern California Law Review here.

Financial stability conferences

2018 Financial stability conference

Functions and Firms: Using Activity and Entity-based Regulation to Strengthen the Financial System Conference

In light of U.S. Treasury Department reports released in 2017-2018 on core principles in financial regulation, how should regulators pursue an activities-based approach to promoting financial stability? How can our regulatory structure adapt to this approach, particularly given the rise of fintech and emerging financial products?
Read more about "Functions and Firms: Using Activity and Entity-based Regulation to Strengthen the Financial System Conference"
2017 Financial stability conference

FinTech Risks and Opportunities: An Interdisciplinary Approach

Fintech continues to disrupt and evolve, not only in how financial products and services are delivered, but who delivers them. Innovation can help to catalyze growth, to create new opportunities, to promote transparency, and to manage risk. However, it can also create new risks, including from operations and cyber incidents. How can regulators balance innovation and risk?
Read more about "FinTech Risks and Opportunities: An Interdisciplinary Approach"
2016 Financial stability conference

Big Data in Finance

As new data sets are created, opportunities emerge. Vast quantities of financial data may help identify emerging risks, enable market participants and regulators to see and better understand financial networks and interconnections, enhance financial stability, bolster consumer protection, and increase access to the underserved. Financial data can also increase transparency in the financial system for market participants, regulators, and the public. How can big data be used to enhance financial stability and address other challenges in financial markets?
Read more about "Big Data in Finance"
2015 Financial stability conference

Interdisciplinary Approaches to Financial Stability

How can methods from diverse fields, such as system analysis, agent-based modeling, and data visualization and security, be used to better identify, measure, monitor, and mitigate risks in the financial system? More than 250 regulators, policymakers, financial market participants, and academic researchers came to Ann Arbor to explore these issues and more.
Read more about "Interdisciplinary Approaches to Financial Stability"