This paper represents an effort to discuss the issue of whether unregulated financial markets can be implemented and ensure efficiency and stability. In addition, we would like to assess whether some of the financial difficulties can be explained by incorrect regulatory arrangements provided by the monetary authorities. This discussion has been motivated by the experiences of some developed and developing countries with financial deregulation. As we will see, those experiences ended with the collapse of some financial institutions or the whole banking system, in particular, in LDC's.