Regulations of Financial Markets and Global Financial Crisis
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Regulation of Financial Markets
BA (Hons) Business Management
Word Count: 2750
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Q: Explain the main reasons why financial markets are regulated? To what extent do you think that recent problems in the financial markets are the result of too little regulation?
Introduction:
Since the inception of this world, people are following rules in one way or the other. Every aspect of our lives follows a pattern. The best patterns and practices are developed in to rules. If there are no rules, there will be chaos everywhere and catastrophe ready to strike at any moment. To keep our lives peaceful and in order, we follow rules. Some of them are set by us and some by law experts and regulators.
Regulation is setting up of rules (Gowland, 1990). Regulations are imposed for our own protection. In the business and financial world, regulations play a vital role in the structuring of the system. Without regulations, the businesses and economies would fail. The financial world’s main reason for existence is to deal with money. Financial world comprise of stock markets, banks, insurance companies etc. The financial markets control the money in every aspect possible. This is the reason regulating the financial markets is necessary.
Aims of Regulation:
Regulating the financial markets and institutions comes at a cost. It is quite expensive to develop and implement the regulations (Gowland, 1990). The regulatory bodies need to have a very strong reason to regulate the financial markets and institutions.
The main reasons of the regulation of financial markets and institutions includes; the association of financial markets with investor’s money (Pilbeam, 1998). People all over the world invest money in different ways; they can invest in the stock markets, in banks or in insurance companies. To protect the investor’s money, regulations are imposed. If the financial markets and institutions are not regulated, people can
Regulation of Financial Markets
BA (Hons) Business Management
Word Count: 2750
-------------------------------------------------
Q: Explain the main reasons why financial markets are regulated? To what extent do you think that recent problems in the financial markets are the result of too little regulation?
Introduction:
Since the inception of this world, people are following rules in one way or the other. Every aspect of our lives follows a pattern. The best patterns and practices are developed in to rules. If there are no rules, there will be chaos everywhere and catastrophe ready to strike at any moment. To keep our lives peaceful and in order, we follow rules. Some of them are set by us and some by law experts and regulators.
Regulation is setting up of rules (Gowland, 1990). Regulations are imposed for our own protection. In the business and financial world, regulations play a vital role in the structuring of the system. Without regulations, the businesses and economies would fail. The financial world’s main reason for existence is to deal with money. Financial world comprise of stock markets, banks, insurance companies etc. The financial markets control the money in every aspect possible. This is the reason regulating the financial markets is necessary.
Aims of Regulation:
Regulating the financial markets and institutions comes at a cost. It is quite expensive to develop and implement the regulations (Gowland, 1990). The regulatory bodies need to have a very strong reason to regulate the financial markets and institutions.
The main reasons of the regulation of financial markets and institutions includes; the association of financial markets with investor’s money (Pilbeam, 1998). People all over the world invest money in different ways; they can invest in the stock markets, in banks or in insurance companies. To protect the investor’s money, regulations are imposed. If the financial markets and institutions are not regulated, people can
References: * Begg, I. (2009) ‘Regulation and Supervision of Financial Intermediaries in the EU: The Aftermath of the Financial Crisis’, Journal of Common Market Studies, 47(5), pp. 1107-1128. * Edgar, R.J. (2009) ‘The Future of Financial Regulation: Lessons from the Global Financial Crisis’, The Australian Economic Review, 42(4), pp. 470-476. * Gowland, D. (1990) The Regulation of Financial Markets in the 1990’s. Aldershot: Elgar. * Howells, P and Bain, K (2004) Financial Markets and Institutions. 4thedn. Harlow: Financial Times Prentice Hall. * Morrison, A.D. and White, L. (2009) ‘Level Playing Fields in International Financial Regulation’, The Journal of Finance, 64(3), pp. 1099-1142. * Pilbeam, K. (1998) Finance and Financial Markets. Basingstoke: Macmillan Press.