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Unformatted text preview: externality? In what ways do the existence of negative externalities justify the extra regulatory attention received by financial institutions?
22. If financial markets operated perfectly and costlessly, would there be a need for
23. Why are FIs among the most regulated sectors in the world? When is the net regulatory burden positive?
24. What forms of protection and regulation do the regulators of FIs impose to ensure
their safety and soundness?
25. In the transmission of monetary policy, what is the difference between inside
money and outside money? How does the Federal Reserve Board try to control the
amount of inside money? How can this regulatory position create a cost for depository financial institutions?
26. What are some examples of credit allocation regulation? How can this attempt to
create social benefits create costs to a private institution?
27. What is the purpose of the Home Mortgage Disclosure Act? What are the social
benefits desired from the legislation? How does the implementation of this legislation create a net regulatory burden on financial institu...
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- Spring '09