banking deregulation in the economy
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Would banking deregulation be good for consumers as well as the economy in general?
Other issues that should be addressed include:
What is the purpose of the main banking regulations
What is the possible impact of loosening these regulations
The current banking crisis
The arguments made by opponents and supporters of banking regulation.
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Solution Summary
The expert determines whether banking deregulation would be good for consumers as well as the economy in general.
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Banking deregulation can be explained as the process in which government oversight over the banking industry for the regulations, which is restricting the bank's activities. Banking deregulation doesn't mean the situation without restriction in place but laws and regulations remains against fraud and other activities. But at the same time the role of government become narrow as it has less direct role for the operation of banking industry (What is Banking Deregulations, 2010). The banking deregulation is a practice, which is mainly seen in the capitalist countries as all the power in capitalist countries remains in the hand of industrialist.
It is argued in the favor of banking deregulations that it increases competition among the banking industry. The increase in the competition due to banking deregulations results increase in the financial growth of an economy. An increase in competition causes reduction in interest rates on loans and borrowings and increase in the investment rates. It provides benefits to both the customers and banking industry as well. It is also argued in the favor of banking deregulations that without banking deregulations it is difficult for an economy to grow sufficiently and in an effective manner. It is because; the banking regulations cause an increase in the restriction on the banks and their operating activities due to government mandates, which prevents the financial growth in an economy. It also affects the customers in general.
The banking deregulation also causes an increase in the innovation and creativity in banking industry as new ideas and practices are adopted by the banks to increase their market share in the banking industry. The main purpose of the banking regulations is to impose regulatory control on the banks and their activities but at the same time the banking deregulations also increases the self regulations through the market forces. The market forces act as the regulatory ...
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