You may want to check the following paper out:

Revisiting the concepts of money, profit and interest from the perspective of value and diminishing marginal utility

AKM Meera, H Mubasheera - … of Islamic Monetary Economics and Finance, 2015 - jimf-bi.org

Prof-Dr-Ahmed Al-Baidhani أ. د. احمد البيضاني Thanks a lot for sharing the paper.

The probability diminishing marginal utility in financial regulation is highly expected and we thank the Prof Al-Baidhani for supplying literature on the subject matter.

Chris enyioma Alozie thanks for your insight. But unfortunately the paper does not address the issue of diminishing utility.

Let us examine the eclectics of theories on the utility of information and communications and research output - yes there is something like that and from my own background the diminishing marginal utility of information and or regulatory of activities apparently occur at the luci (locus) of points where the cost of producing or providing information or regulation is higher that the benefit or regulatory actions are sub-optimal or defective. These requires rationalisations (from commonsense). We also have information asymmetry - these concepts and theories can always be evoked to support the principle of diminishing marginal utility of information or regulatory actions. Thank you, Dons.

They simply modelled this concept with a quadratic equation! Fin Reg, and Square of Fin Reg! My question is how fin reg is measured! Usually financial regulation means not free flow of capital unlike the deregulation that allows quite openness, sometime we refer it as a part of globalization! Once it was acknowledged that deregulation really contributes into the global economy! Now, a new debate has been emerged, does it really contribute into the economy? It is more focused after experiencing a few global financial crises including sub-prime mortgage crisis.

Now they give more importance on regulation in a balanced approach.

Following this approach, I personally hypothesize that it will follow an inverted U-Shape approach, diminishing marginal utility (Too much regulation will have a negative utility).

Chris enyioma Alozie Milan B. Vemić

This is the simplest and still the acceptable way to model the concept. So you may use!

The simple answer to this question is a categorical "YES".

For starters we can quote what in the theory of Financial Regulation is often referred to as "The Regulator-Regulatee Reality" (three Rs!). This is an offshoot of much of the work done on the subject by Prof. Edward Kane who, basically using the old Hegelian philosophical methodology of thesis-antithesis-synthesis, came up with his Theory of Constant RE-regulation.

This model is structured on the reality which subsists wherever regulatory bodies, formally created and run in terms of law, exist. The main consequence here is that we have a structural model which at the top posits the existence of regulators and their structures (the regulators), and at the bottom we have the regulated (or regulatees) who are constantly on the receiving end of whatever emanates from the top.

Looking first at the recipients (victims!!!) of regulation at the bottom of the model there is, in a free market economy structure, a network/a number of operators who live and exist and work in a competitive environment. This makes them use their heads and stratagems to constantly:

- Receive the regulation and see how they can continue to live and, necessarily, compete with its existence;

- See what and when and how to adopt it, in full consonance with the consequences (legal or otherwise) which affect them if they don't

- Get used to practising it and living with it,

- Adapting their ways of living and working and doing business (including the creating of new products) if circumstances allow for such regulatory absorbtion and sidepassing.

It is in the context of the above that we can speak of Regulatory Diminishing Marginal Utility. The simple truth is that market operators receive and accept and, in usage, become so familiar with regulation that they in fact find out how to get round it, ignore its relevance, and hence its diminishing marginal utility. This, also, is a process that can take time.

Coming now back to the top of the model, what should the Regulators there be doing with such a reality? The simple answer is that they should, firstly, be aware that this is a regularly ongoing picture, and hence their main task is constantly that of seeing market reaction and answers to their initial regulating work, see how much its relevance is subsisting over time, and, when the need so arises, going through the process of RE-regulating anew.

In the world of regulation therefore there do not exist such things as "Regulation" and "Deregulation"! The reality is only one of a constant and never-ending process of REREGULATION.

I have tried to follow and investigate the impacts of such realities in my PH.D thesis on "Privatisation of Financial Services in the Central and Eastern European Countries: Relating the Analaysis to the Experience of a Small State". Interested readers may contact me personally on the email address shown below.

Dr. John A. Consiglio

Department of Banking and Finance (FEMA),

The University of Malta.

email: [email protected]

Building on Dr. Vimec's comments, a similar, and possibly related field of study is "capture theory." This theory essentially posits that over time, (while regulations may increase) enforcement becomes less effective because of the relationship between the regulators and the regulated. Relationships become closer after years of working together, that relationship mitigates the professional skepticism of the regulator, allowing the regulated to capture the regulator and render them ineffective.

J.A. Consiglio , Valrie Chambers Thanks a lot for such detailed explanations. It really helped.