Why Do We Need Financial Regulation?
[1] “The purpose of financial regulation is to improve upon the performance of financial markets relative to how they would perform driven solely by the forces of the private marketplace.” Banking is one of the most highly regulated industries within the United States. We can understand the impact of regulation by taking a look at the history and evolution of the banking system through to the present day. The Early Banking System Since the early days of banking, the industry has faced many changes in regulation due to different needs arising throughout the years. In the early days, government control was not favored among most of the original settlers who had come from countries where too much federal control was exerted. Therefore the early banking system comprised of a multitude of different small banks printing their own currency, which would often fail and leave customers with lost funds. ...