Question

who benefitted more from deregulation between investors and the financial services industry and why?

Answer 1

Deregulation is when the government reduces or eliminates restrictions of financial and legal nature on industries. The main purpose of deregulation is to improve the ease of doing business. It removes a regulation that interferes with corporates' abilities to perform and compete, especially in the overseas market.

Government regulations affect the financial services industry in many ways, but the specific impact depends on the nature of the regulation. Increased regulation typically means a higher workload for people in financial services, because it takes time and effort to adapt business practices that follow the new regulations correctly which basically is a hindrance in the way of business operations.

While the increased time and workload resulting from government regulation can be detrimental to individual financial or credit services companies in the short term, government regulations can also benefit the financial services industry as a whole in the long term. for example, Sarbanes Oxley Act was a maneuver to held management of big companies responsible for their internal control and accuracy of financial statements. Implementing these regulations was expensive, but the act gave more protection to people investing in financial services, which can increase investor confidence and improve overall corporate investment.

However, there were severeal times when Government regulations have also been used in the past to save businesses that would have otherwise not survived. The Troubled Asset Relief Program was run by the United States Treasury and gave it the authority to inject billions of dollars into the U.S. financial system to stabilize it in the wake of the 2007 and 2008 financial crisis. Similar can be said regarding investors. Deregulation can have both positive and negative impacts. Besides the above effects which are also applicable for financial service industry, constant regulations by SEC create barriers for trading and investing. But it also protects investors from various market frauds. In addition, investors also gain or lose hugely due to immense market rise and falls created due to certain dergulations. usually a faourable deregulation leads to a rise in market which mainly benefits the investors. So altogether, effects of deregulations on both investors and financial service industry are significant but unrelated and incomparable.