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Banking regulation suffers from the principal-agent problem.
Describe how this problem relates to regulators and politicians.
Step by step
Solved in 2 steps
- Discuss the relevant regulatory reforms that has been implemented in the banking sector to make it more resilient.Explain the four different layers of protection and regulation that are imposed by regulators of commercial banks to ensure their safety and soundnessWhich of the following best defines a financial intermediary? a collection of stocks and bonds issued to investors an asset sold by a company which entitles the buyer to partial ownership a claim by a buyer to a future payment by a seller a financial institution that transforms investor funds into financial assets
- Why are not more resources allocated to the prudential regulation of the banking sector, which is plainly necessary to prevent financial crises?How might possibilities for regulatory capture contribute to the large number of financial regulators and deposit insurance funds?Outline and critically evaluate the main arguments in the literature on bank competition and excessive risk taking by banks
- Which of the following is not a function of financial intermediaries? A Deal with asymmetric information problems B. Reduce the exposure of investors to risk C. Promote adverse selection after transactions. D. Lower transaction costsBank regulators are having a dilemma about whether to discourage banks from becoming a monopoly and at the same time promoting competition. Why?evaluate and discuss four reasons why it is necessary to regulate banks, especially within the context of the COVID pandemic.
- What is the main purpose of financial regulation? What kind of instruments may a government use to protect the economy and country from financial panic?What short and long term effects did deregulation of the banking industry from the 1980s through the early 2000s have on bank consumer lending programs?Identify regulators in sectors apart from financial services, that should be involved in the Central Bank’s Fintech Regulation Committee. Motivate why these regulators .should be involved.