Day: September 25, 2021

Prudential and conduct of business regulation Prudential regulation is mainly concerned with consumer protection. It relates to the monitoring and supervision of financial institutions, with particular attention paid to asset quality and capital adequacy. The case for prudential regulation is Read More …

Lender of last resort facility (LLR) Banks can borrow from the Federal Reserve’s/ Central Banks discount window. While discounting is a tool of monetary management, the 1 Fed/CBK can also use discounting to prevent bank panics. When the Fed acts Read More …

BANK REGULATION AND SUPERVISION The rationale for regulation Financial systems are prone to periods of instability. In recent years, a number of financial crises around the world (South-east Asia, Latin America and Russia, Global financial crisis) have brought about a Read More …

Financial Intermediaries and Information Costs Information costs make direct finance expensive and thus difficult to obtain. This generates the role of indirect financing and financial intermediation. Much of the information collected by intermediaries is used to reduce information costs and Read More …

INFORMATION ASYMMETRIES AND INFORMATION COSTS Information is a central element to efficient markets. When the costs of obtaining information are too high, some potentially beneficial transactions do not take place and markets tend to stall. Information costs sometimes make financial Read More …

FINANCIAL INTERMEDIATION The efficiency of an economy is much determined by not only how developed the financial system is but also by the effectives of its financial intermediation. A health economy requires a well run intermediation process. A financial intermediary Read More …