Why does the financial industry need to be regulated Research Paper

Why does the financial industry need to be regulated - Research Paper Example A sound financial industry primarily involves deep, efficient markets, solvent, operational financial intermediaries and a legal framework that clearly defines the rights and obligations of all participants. Financial markets are the core of any financial system architecture, holding a central position as they are a real catalyst for the overall economic activity. Depending on country-specific factors, culture and historical traditions, but also on the globalization of markets, national financial systems have both special features and common elements. Academic literature provides a classification of financial systems as follows: Bank-dominated financial systems (the German-Japanese model); Capital-market dominated financial systems (the Anglo-American model). If analyzing the characteristics of the financial systems over the past 30 years, we note the shift from the traditional bank-based orientation towards capital markets. Crucial elements of this change are monetary and financial integration processes and financial innovation. As part of financial industry, the US financial companies enhance money flows by offering various services in different areas: accounting, bank and credit unions, consultancy, insurance agencies, investment banking, professional services, security brokers, venture capital. With combined annual revenue of almost $65 billion, the US accounting and fiscal industry sums more than 90,000 companies (Richardson). The leading players providing accounting services include Price Water House Coopers, Deloitte Touche Tohmatsu, Ernst & Young, KPMG and H&R Block. The same recent statistical data reveal the structure of the US banking system shaped by 8,000 commercial banks, 1,400 savings banks and 10,000 credit unions with combined annual revenue of $600 billion. Bank of America, JPMorgan Chase, Citibank, and Wachovia are the most powerful commercial banks. The US banking market is highly concentrated, 50 largest institutions spreading more than 60% of the financial industry. The credit union environment displays a fragmented anatomy with 6% of industry revenue, much lower than commercial banks percentage (80%) and closer to savings banks, with a share of 14%. Financial planning and consultancy services shape an industry with annual revenue of $15 billion split between 10,000 US firms. Morningstar, Value Line and units of financial services companies are in the top. In the field of insurance services, the 130,000 US units generate annual revenue of $85 billion, having as market leaders March & McLennan, Arthur J. Gallagher and Aon. Investment banking is served by 2000 companies with annual revenue of almost $110 billion, with the largest 50 firms holding 90% of the sector. Morgan Stanley and Goldman Sachs are the key competitors. The securities brokerage industry includes less than 4000 bodies, while the major players in investment companies are Merrill Lynch, Charles Schwab, AG Edwards, and brokerage companies like Citigroup and Fidelity. Venture capital industry generates annual revenue of about $26 billion and has more than $250 billion under management. The most important companies include New Enterprise Associates, Kleiner Perkins Caufield and Byers, and Technology Crossover Ventures. Why does the financial industry need to be regulated? The empirical literature (Goodhart et al.) and practical experience point out three main reasons that justify government intervention in the financial industry: 1). Information asymmetry: unlike financial institutions, customers are much less informed, so that financial supervision aims to balance the situation; 2). Externalities: the collapse of an

Discussion Board Coursework Example | Topics and Well Written Essays - 250 words - 5

Discussion Board - Coursework Example Despite the sinful nature of humanity, god is prepared through the use of His power to save the world from sins or problems and restore their initial nature according to God’s promises (Lee, 2010). In my opinion, I totally agree with Paul’s view of the human nature according to Romans 1:18-32. In the contemporary society human nature has been corrupted to reflect the sinful nature of the world. For instance human nature is filled with sinful desires such as homosexuality. The world has experienced a lot of problems and issues as a result of the sinful nature f human beings. Furthermore, it is evident that humanity as a result of its sinful nature has problems. Human beings have turned away from the worship of the one and true God and instead engaged themselves in the worship of idols. Money is considered as an idol of worship among human beings in the contemporary society. Hence, I totally agree with Paul’s view in relation to the nature of