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Why do banks innovate around regulations by “loophole mining”, and what are some examples? (200)

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  • Post Date 2018-11-08T09:56:03+00:00
  • Post Category New Samples

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Why do banks innovate around regulations by “loophole mining”, and what are some examples? (200)

Why do Banks Innovate Around Regulations by "Loophole Mining”

INSTRUCTIONS:

  Unit VIII Financial Institution

 

  1. Why do banks innovate around regulations by “loophole mining”, and what are some examples? (200)

 

  1. What are some of the ways that moral hazard and adverse selection are limited for insurance products?

 

  1. Summarize the regulatory framework found within the securities industry.

 

  1. What are the protections and regulations created for pension plans?

 

 

Mishkin, F. S., & Eakins, S. G. (2012). Financial markets and institutions (7th ed.). Upper Saddle River, NJ: Prentice Hall.

 

 

 

 

 

 

CONTENT:

Financial Institution Name Institution Financial Institution Question 1 Loophole mining is a term that is used by banks to find their way around regulations set by the government. In most cases, the government might come up with regulations that make it hard for banks to make profits. To guarantee their survival, banks look for ways through which they can defeat these regulations without necessarily breaking the law. This is important for banks as the failure to innovate may make it hard for a bank to stay competitive. An example of loophole mining is derived from the Great Inflation where banks were forbidden by the law to pay any interest on checking deposits or on amounts exceeding percent on time deposits something that was far less than the existing market rates at that time. Banks tried to lure depositors by offering them incentives

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