Why does the banking sector require regulation?
Banking and Financial Institutions
Asked by Question Bot12/Feb/20151 answer
1 Answer
Today's regulations mitigates market and invest risk on the money that depositors have with the bank.
An unregulated bank poses a much higher risk of losing your money than a regulated bank. The regulation comes on behalf of the depositors who are not financially savvy to understand how their money is going to be kept safe, invested, etc. hence they turn their trust to the financial regulator to ensure the same.
Whether you agree to this line of regulation (read: control) or not, is your prerogative. But history will tell you, unregulated businesses have a much higher chance of losing your money or in many cases, defraud depositors.
An unregulated bank poses a much higher risk of losing your money than a regulated bank. The regulation comes on behalf of the depositors who are not financially savvy to understand how their money is going to be kept safe, invested, etc. hence they turn their trust to the financial regulator to ensure the same.
Whether you agree to this line of regulation (read: control) or not, is your prerogative. But history will tell you, unregulated businesses have a much higher chance of losing your money or in many cases, defraud depositors.