The Impact of Financial Regulatory Legal Systems on Financial Market Stability

Abstract

The legal framework for financial regulation significantly impacts the stability of financial systems. The lack of a well-developed financial regulatory legal system has resulted in the absence of clear operational standards for financial markets, preventing stakeholders from working collaboratively to promote the rapid development of the financial sector. This study employs a methodological approach combining theoretical analysis and case studies to comprehensively investigate the mechanisms through which financial regulatory legal systems impact market stability. By systematically examining global financial regulatory practices, the research proposes four key strategies for enhancing financial market resilience: (1) refining legislative frameworks, (2) strengthening digital regulation, (3) establishing comprehensive risk prevention mechanisms, and (4) enhancing legal awareness through public education. The findings reveal that the integration of robust legal systems with cutting-edge regulatory technologies significantly mitigates systemic risks and fosters market stability. The study’s innovative contribution lies in its integration of digital technologies with legal regulatory approaches, exploring financial market stability from both institutional and technological perspectives, offering practical recommendations for policymakers and industry stakeholders.