Regulatory Effectiveness Paper

Words: 1034
Pages: 5
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Jiaxin Tang
Kevin Mirabel
FNBU 3221 - RUH
March 10th 2015
Regulatory Effectiveness
The financial world is diverse and contains many financial instruments and analyst. Ideally, the widespread units in the financial world warrant that there has to be some form of regulation to govern the conduct of the financial players. Notably, these regulations are only effective if they ease the business transactions done within the financial world. In this regard, the term regulatory effectiveness is used to refer to the implementation of financial rules and regulations in a systematic and a positive manner. The financial stakeholders understand the essence of having rules and regulations. Hence, they offer the support toward the correct interpretation …show more content…
This was a period in which there was economic recession and high levels of unemployment. Notably, the burst of the dot.com bubble in 2001 also posed a threat to the economic stability of the United States economy. Deepened with the issuance of subprime mortgages crisis, the United States economy took a down turn and other world economics also suffered (Morriss and Henson 22). Stakeholders in the financial world offer different reactions and thoughts on the need to offer regulation. Proponents in favor of regulation of the financial sector argue that it would curb any form of fiscal malpractices. Therefore, governments implement regulatory agents to protect the consumers from any form of exploitation. The other main reason for regulating the financial sector is to guarantee a stable economy. This is made possible through management of business activities in stock markets and other financial markets. The effectiveness of these regulatory approaches is only known if business and people can work together and the economy remains …show more content…
These stakeholders argue that the implementation of many regulations hinders the free flow of financial resources. However, many stakeholders are not against regulation but are against the implementation of many different regulatory clauses. For instance, the United States banking sector is governed by more than 14,200 banking acts. The regulatory watchdogs have to be keen to enforce all the acts. The other stakeholders who have aired their voices on the need for deregulations are stakeholders in the political system. Essentially, the interference from political systems makes regulators lack the required freedom and liberty to enforce legal clauses (Nowak 10). However, it is through independence that the central bank manages to regulate and control any inflation pressure within the economy. The regulators have a high level of independence when comes to handling banking and regulatory
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