22:05 Week 10 Financial Regulation 1 of 2 now.ntu.ac.uk FMIS Week 10 Seminar Questions 86 1....

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22:05 Week 10 Financial Regulation 1 of 2 now.ntu.ac.uk FMIS Week 10 Seminar Questions 86 1. Discuss the rationale for govt intervention in financial markets, from the aspects of the problems of externalities, asymmetric information, and the principal-agent issue. 2. What are the pros and cons of self-regulations compared to statutory regulation of financial institutions? 3. How does micro-prudential supervision differ from macro-prudential supervision? Give two examples for each type of supervision. 4. Discuss TWO types of financial regulation and explain how they help keep the financial system safe. 5. The creation of deposit insurance encouraged reluctant depositors to put their money into the banking system. Aside from the benefit of reducing the probability of a bank run, what other positive impact has this policy had in the performance of the overall economy? 6. In the US, the deposit insurance offered by FDIC was up to a limit of $250,000. Should a bank fail, FDIC uses two methods to handle. The payoff method allows a bank to fail and pays off deposit up to $250,000 insurance limit and let the bank to be liquidated. After liquidation, depositors may receive more but the liquidation process takes years to complete. The purchase and assumption method invites a willing merger to assume the bank's liabilities and re-organize the bank. Suppose that you have $300,000 in deposits at a bank. After careful consideration, the FDIC decides that this bank is now insolvent. Which method would you like to see the FDIC apply? What if your deposit were $200,000? 7. What are the costs and benefits of a too-big-to-fail policy? 8. Discuss the role of financial regulation in a world moving toward financial deregulation. 9. Why should a bank's capital requirements enhance its profitability in the long run? Week 10 Financial Regulation 10. In what way might consumer protection regulations negatively affect a financial intermediary's profits? Can you think of a positive effect of such regulations on profits? 11. What are the disclosure requirement measures that are undertaken by banks to enhance users' - stakeholders and/or investors, and bank customers - understanding? 12. What are SIFIS? How should they be regulated? 1 22:05 Week 10 Financial Regulation 1 of 2 now.ntu.ac.uk FMIS Week 10 Seminar Questions 86 1. Discuss the rationale for govt intervention in financial markets, from the aspects of the problems of externalities, asymmetric information, and the principal-agent issue. 2. What are the pros and cons of self-regulations compared to statutory regulation of financial institutions? 3. How does micro-prudential supervision differ from macro-prudential supervision? Give two examples for each type of supervision. 4. Discuss TWO types of financial regulation and explain how they help keep the financial system safe. 5. The creation of deposit insurance encouraged reluctant depositors to put their money into the banking system. Aside from the benefit of reducing the probability of a bank run, what other positive impact has this policy had in the performance of the overall economy? 6. In the US, the deposit insurance offered by FDIC was up to a limit of $250,000. Should a bank fail, FDIC uses two methods to handle. The payoff method allows a bank to fail and pays off deposit up to $250,000 insurance limit and let the bank to be liquidated. After liquidation, depositors may receive more but the liquidation process takes years to complete. The purchase and assumption method invites a willing merger to assume the bank's liabilities and re-organize the bank. Suppose that you have $300,000 in deposits at a bank. After careful consideration, the FDIC decides that this bank is now insolvent. Which method would you like to see the FDIC apply? What if your deposit were $200,000? 7. What are the costs and benefits of a too-big-to-fail policy? 8. Discuss the role of financial regulation in a world moving toward financial deregulation. 9. Why should a bank's capital requirements enhance its profitability in the long run? Week 10 Financial Regulation 10. In what way might consumer protection regulations negatively affect a financial intermediary's profits? Can you think of a positive effect of such regulations on profits? 11. What are the disclosure requirement measures that are undertaken by banks to enhance users' - stakeholders and/or investors, and bank customers - understanding? 12. What are SIFIS? How should they be regulated? 1