Having said that, financial regulation has an important preventive function. The OECD’s principles of financial regulation state: “A pre-cautionary approach is warranted in financial regulation; policy makers should pro-actively anticipate and address emerging risks and problems and not initiate reforms solely in response to the onset of a crisis”.
Looking at the Financial Statements Statistics of Corporations by Industry, coupled with an increase in sales, the ratio of firms’ current profits to sales has recently reached around 5 percent for all industries and firms of all sizes – a high level that exceeds that prior to the global financial crisis (Chart 7).