Since the credit crisis of 2008, the regulation of the entire financial industry has been a...

Since the credit crisis of 2008, the regulation of the entire financial industry has been a prime focus of both federal and state regulators. From your perspective, has regulation helped or hurt the economy?

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Expert Solution

About 10 years have been passed after the credit crisis of 2008. Many reforms were introduced. Thanks to these reforms as the banking and financial system has become much more safer and stable. Lets have a look at following points:

Loss absorbing capacity among the largest banks have increased as compared to 2008.
Banks now own more high quality and highly liquid assets.
The percentage of assets that are prone to crisis and become part of money market funds have been reduced.
Large institutions and banks have now have more balanced and organized capital structure to avoid any losses.
Private sector assessments have been more regulated and supervised to avoid any unforeseen circumstances.
Credit rating agencies have become more strict in their ratings to bring the clear picture in the eyes of stakeholders.
Higher levels of bank capital have made the financial system more safer and have reduced the possibility of occurrence of crisis.
Special steps are being taken to improve the functioning of small and medium sized institutions to utilize the resources properly.
Proper check is being kept on the effects of regulation on credit availability and changes in market liquidity.
Steps are being taken by banks to keep a proper balance on how much to lend to borrowers and how much to be kept as reserves to avoid any adverse situation.
Credit is given to people or business units on the basis of stable and clean credit history and not on the basis of size of the units.
Corporate bonds have shown good market liquidity and the financial markets have been over the past years.

Rahul Sunny answered 10 months ago

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