Financial Regulations

TABLE OF CONTENTS

1.        INTRODUCTION        2

3.        Merits of Financial Regulation        3

3.1        Investor’s confidence        3

3.2        Transparency        3

3.3        Recognize and promote stakeholder responsibilities        3

3.4           Safety and Soundness        4

3.5        Implementation of laws        4

3.6        Consumer Protection        4

3.7        Financial Stability        4

4.        Demerits of Financial Regulation        4

4.1        Costly        5

4.2        Value For Money        5

4.2        Rigidiness & Inflexibility        5

4.3        Conflict Of Interest        5

4.4        Higher Interest Rates        5

5.        DownFalls Of UNREGULATED fINANCIAL SYSTEM        5

5.        COnclusion        6

1. INTRODUCTION

FINANCIAL REGULATION is a type of standards and laws, which subjects’ money related organizations or financial institutions to specific necessities, confinements and rules, planning to keep up the uprightness of financial framework. These guidelines are by and large declared by either a government or non-government association to secure investors. Regulatory activities may incorporate some arrangement of gauges for lead and funding to keep up the respectability of money related framework. Fundamental points and targets of these regulations are to ensure buyer rights, keep up financial stability, lessening money related fakes and violations and controlling foreign participation in the financial markets.

Financial regulation is a form of standards and laws which are made for the banks and other financial regulation to meet specific rules and regulation in order to maintain the uprightness of financial framework. These guidelines are provided by a either a government or non-government organizations or association to secure a wide variety of stakeholders’ investments. Regulatory agencies make new rules and laws for funding and investment in order to keep up the respectability of the banking system. The main aims of these regulations are to ensure the investors right, reducing frauds, maintaining financial stability and controlling violations in the monetary markets.

The system of financial regulation is very mind boggling. There are many federal, state and industry-supported self representing affiliations and the duty to control financial industry is part among those affiliations. Holes exit in the supervisory structure, as few firms answer to few and, now and again, no controller. It is sometimes extremely vague to realize that who manages whom and which standards to apply. This perplexity restrains advancement in the financial business and it might encourage disarray among the financial specialists whether to take after those directions or not. The most vital question is to ask whether this disarray increment financial development or it causes monetary flimsiness.

Financial regulation system is very complex and difficult as there are various state, federal and industry representative affiliations. As there is an involvement of various affiliations therefore the duty to manage, control and implement financial regulations is divided between these affiliations. There are loopholes in the supervisory structure as very small amount of firms’ answers to few which restricts the accountability. These lapses in the system make it difficult to implement proper controls.  

2. HISTORY & BACKGROUND

Amid the season of Great Depression, the administrative power reacted diversely in Britain, France and the United States. The Great Depression of the 1930s is the most genuine monetary emergency in present day history. Its principle budgetary emergencies were the Wall Street crash (1929), saving money emergencies happening over a time of five years, financial droop and disappointment of world's fiscal request. Wall Street Crash in October 1929 was not basically reason of the ’Great Depression’. Its fundamental driver was the fiscal arrangement that was created by global monetary system of the time.

The Great Depression of 1930s was the greatest financial crisis of the history. After the great depression, the government of Britain, France and United States reacted promptly to deal with the crisis.

Main banking crises happen somewhere around 1931 and 1934. These banking crises didn't influence all nations like United Kingdom and somehow France; however banking crises were extreme in the United States and Germany. Major monetary emergency occurred in the United States, in 1930: 256 banks failed in November (with $180 million stores) and 352 in December ($352 million). The emergency moved from Germany to Britain; however it was for the most part a cash emergency. In 1938, financial emergencies were extreme in The United States and its GDP was 12 % lower than in 1929, while it had developed by 10% in Britain.

Because of those money related emergencies administrative measures were embraced in various conditions in the United States, France, and Britain. In March 1933, the Securities Act on the capital market the Banking Act, on banks, had become effective. The Securities Exchange Act of 1934, which created the Securities and Exchange Commission (SEC); the Banking Act of 1935, which improved the Federal Reserve System, centralizing the conduct of monetary policy. In 1939, Financial Institutions Reform, Recovery and Enforcement Act (FIRREA) was passed and the Investment Companies Act of 1940, which systematized the rules governing investment companies. In 1941, enactment was passed in France after it was possessed by Germany.