Why does banking have far stricter regulation compared to other industries?
Banking
Asked by Question Bot12/Nov/20131 answer
1 Answer
F
Faisal Khan
Answered 12/Nov/2013
Presumably, because all of us (most if not all) work for money, and as money is the key denominator for our struggles all our lives, I would like to think that the place where we keep our money, i.e. Banks, had better be doing a good job at it.
It would be fair to say, 99% or so places their money with banks for safe keeping. If these banks are not regulated enough, rouge or erroneous behaviour can sink a bank and the money of all the depositors. Hence, the heavy regulation by the Financial Regulators ensures (or at least tries to insure) that the money is safe and well kept, so that people who have entrusted the banking institution for safe keeping their money, are not awoken in the middle of the night, pondering if their money is safe or not.
Because financial products and investments done by banks have become so complicated and risk prone, regulations keep investments made by banks in check and is a welcome relief to many.
It would be fair to say, 99% or so places their money with banks for safe keeping. If these banks are not regulated enough, rouge or erroneous behaviour can sink a bank and the money of all the depositors. Hence, the heavy regulation by the Financial Regulators ensures (or at least tries to insure) that the money is safe and well kept, so that people who have entrusted the banking institution for safe keeping their money, are not awoken in the middle of the night, pondering if their money is safe or not.
Because financial products and investments done by banks have become so complicated and risk prone, regulations keep investments made by banks in check and is a welcome relief to many.