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Chapter 2: Q.23 (page 97)

Financial regulation is similar, but not exactly the same, in industrialized countries. Discuss why it might be desirable—or undesirable—to have the same financial regulation across industrialized countries

Short Answer

Expert verified

It is desirable to have same financial regulation so that the manufacturers do not have to migrate their business.

Step by step solution

01

Step 1. Introduction

Financial regulations guard consumers' investments. Regulations save you monetary fraud and restriction the dangers monetary establishments can take with their investors' money. Financial regulators oversee 3 most important monetary sectors: banking, monetary markets, and consumers

02

Step 2. Explanation

It might be useful to have monetary rules which can be same in all international locations to keep away from monetary markets individuals emigrate their commercial enterprise to international locations with fewer rules. On the alternative side, all international locations are exclusive and designing a not unusual place set of monetary rules appears to be a alternatively hard task.

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Most popular questions from this chapter

One of the single best sources of information about financial institutions is the U.S. Flow of Funds report, produced by the Federal Reserve. This document contains data on most financial intermediaries. Go to http:// www.federalreserve.gov/releases/Z1/ and find the most current release. You may have to get Acrobat Reader if your computer does not already have it; the site has a link for a free download. Go to the Level Tables and answer the following questions.

a. What percentage of assets do commercial banks hold in loans? What percentage of assets is held in mortgage loans?

b. What percentage of assets do savings and loans hold in mortgage loans?

c. What percentage of assets do credit unions hold in mortgage loans and in consumer loans?

Describe who issues each of the following money market instruments:

a. Treasury bills

b. Certificates of deposit

c. Commercial paper

d. Repurchase agreement

e. Fed funds

A significant number of European banks held large amounts of assets as mortgage-backed securities derived from the U.S. housing market, which crashed after 2006. How does this demonstrate both a benefit and a cost to the internationalization of financial markets?

One of the factors contributing to the financial crisis of 2007–2009 was the widespread issuance of subprime mortgages. How does this demonstrate adverse selection

Go to the St. Louis Federal Reserve FRED database, and find data on the total assets of all commercial banks (TLAACBM027SBOG) and the total assets of money market mutual funds (MMMFFAQ027S). Transform the commercial bank assets series to quarterly by adjusting the Frequency setting to “Quarterly.” Calculate the percent increase in growth of assets for each series, from January 2000 to the most recent quarter available. Which of the two financial intermediaries has experienced the most percentage growth?
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