18 concept questions 1 why should more regulation be

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Unformatted text preview: le that charter is likely to be. Thus, barriers to entry and regulations pertaining to the scope of permitted activities affect the charter value of an FI and the size of its net regulatory burden.18 Concept Questions 1. Why should more regulation be imposed on FIs than on other types of private corporations? 2. Define the concept of net regulatory burden. 3. What six major types of regulation do FIs face? The Changing Dynamics of Specialness At any moment in time, each FI supplies a set of financial services (brokerage related, asset transformation related, or both) and is subject to a given net regulatory burden. As the demands for the special features of financial services change due to changing preferences and technology, one or more areas of the financial services industry become less profitable.19 Similarly, changing regulations can increase or decrease the net 18 Indeed the higher an FI’s charter value, the lower the incentive it has to take risk. See, for example, A. Saunders and B. Wi...
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