How has globalization of the financial sector impacted the regulatory agencies that oversee financial institutions?

Expert Solution

The financial institutions create a pool of fund by collecting the money from many small investors (savers) by paying them interest or sharing profit and then divert that capital to companies or individuals in form of loan (borrowers). Financial institutions are commercial banks, pension funds, insurance companies, mutual funds, credit companies etc. As they deal custodian of money therefore regulated with strict rules and regulation by the regulatory authorities to safeguard the money of the investors.

The globalization of the financial sector impacted the regulatory agencies that oversee financial institutions in the manner that they are focusing and trying to shape, enforced and change with time to respond to changing factors like deregulation, rapid technological changes and intense competition in international environment. The development in one part of globe is impacting the other parts also as they are interconnected therefore similar types are regulations related to financial sectors are coming out. The globalization of the financial sector has impacted the regulatory agencies to make similar regulations to build uniformity in financial institutions worldwide.

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