Financial Regulations Trends Sample Essay

Financial Regulations Trends Sample Essay

Financial Regulations Trends

Introduction

Financial prospects and concepts have been receiving enormous attention in the past years. On the other hand, these regulations are always common in all countries and areas. Also, the importance of financial regulations is well documented by different scholars from previous years. Kumar (2014, p. 31) defined financial regulations as the major rules that govern financial institutions in a jurisdiction. It is well established that these rules are of great importance in the society. These regulations focus on providing fair competition, stability in financial systems, and also prevention of aspects such as financial crimes. Generally, it can be argued that the use of financial regulations is of great importance in the society. Therefore, this essay focuses on the aspects of financial regulations that are applied in the modern-day society to shed light on the importance of these regulations Financial Regulations Trends Sample Essay

The essay, therefore, addresses the concepts of financial regulations, especially during the COVID-19 pandemic considering the economic turmoil that the pandemic caused in society. Therefore, the essay ends by addressing the importance of financial regulations that govern the financial security of organizations during pandemics that affect the economic status.

Importance of Financial Regulations

Different sources from the past years have addressed the importance of financial regulations in the modern-day society. According to Teall (2018, p. 113), generally, it can be argued that financial regulations in an economy have great benefits. It prevents the failure of the market, protects the investors in a market, promotes the stability of the macroeconomy, and also mitigates the influence that the financial failure can have in an economy. As a result, it can be argued that financial regulations are an aspect that is of great importance in the society. Due to the perceived importance of financial regulations, it is evident that they are needed in all the markets in society Financial Regulations Trends Sample Essay

This includes global economies. Stowell (2018, p. 117) expounded on this aspect by arguing that financial regulators from all over the world formulate regulations to govern financial prospects in the global market.

This is an activity that is greatly contributed to by the importance of financial regulations in society today. Besides that, different scholars from the past have conducted studies to address the aspects of financial regulations in different markets. Carstens (2019) for instance brings forth the fact that this is a live aspect of Spain. Awrey and Judge (2020, p. 20) present the reasons for the continuous falling short in the financial regulations of Columbia and Kodongo (2017, p. 2851) presents this concept in the Kenyan economy. Therefore, it can be argued that different markets from all over the world have these regulations. It can be argued that the availability of financial regulations in most of the market presents the fact that these regulations have great economic importance in society Financial Regulations Trends Sample Essay

Latest Developments in Financial Regulations

Due to the perceived importance of financial regulations, it can be argued that this is a sector that gets enormous changes in society. This means that there are evident trends according to the economic patters in the regulations that control the financial prospects. As a result, this part will focus on the general trends in the financial regulations that are in the US. Some of the major financial regulations include the applicability, the financial year, budget, annual contributions, resources and funds, custody of funds, investment of funds, risk management and internal control, insurance and losses, the accounts, financial statements, management reporting, independent auditing, Internal Audit and Risk Management, authority regulations and finally the general provision concepts (International Federation of Red Cross and Red Crescent Societies, 2017). It can be argued that the concepts of financial regulations have been receiving enormous attention in society. The above listed regulatory paradigms are adopted with the federal government. However, these financial regulation trends run across different countries as well as companies Financial Regulations Trends Sample Essay

From the introduction of the concept of financial regulation, it is evident that these are the operational paradigms that focus on the regulatory prospects of the existing financial prospects as well as institutions. One of the common trends in this area is the aspect of auditing. From the trends of modern-day society, it can be seen that most of the evident developments revolve around technological aspects. This means that the companies are adopting better methods to operate that depends on the available technologies. On the other hand, it can be argued that there has been a body of researches that has attempted to address the concept of auditing quality and independence. As a result, this is one of the financial regulation prospects that are receiving enormous attention in society today. Generally, it can be argued that factors that affect the economy of an area of the world also affect the trends in the financial regulation’s paradigms.

Despite addressing the above regulatory aspects, it can be argued that international financial regulations are of great importance. According to Author (2020), Basel iii is an international regulatory accord that focuses on controlling the banking sector’s financial prospects. This accord requires that banks should keep a certain level of reserve capital at hand and also maintain a proper leverage ratio Financial Regulations Trends Sample Essay

Generally, it can be argued that this is a document that assists banks in dealing with the financial crisis. In addition to that, this regulatory accord assists in building transparency among banks as well as improving risk management aspects of the bank. From the standards set by the Basel iii, it can be argued that it assists in preventing future risks in banks by ensuring that there are some minimum qualifications for the banks in the world.

Some of the major regulatory paradigms that the Basel iii accord ensure includes:

  • The minimum capital requirements for the banks
  • Countercyclical measures which emphasize on the setting aside of the additional capital of the banks during the credit expansion periods
  • Liquidity and leverage measures
  • Some regulatory conditions for forex traders where $100k demo accounts that never expire is kept

By implementing the above regulatory prospects by banks, it can be argued that banks in society will be able to secure their future endeavors. This is an important aspect especially during the times that there is a financial crisis in society. One of the main areas where these regulations were important was during the spread of COVID-19 coronavirus. It can be argued that this is a virus that spread all over the world causing most of the economic activities to stop. As a result, the economy had some issues and therefore, banks and other companies could not participate in the business. During such times, banks can still manage to stand until the economic crisis subsides. This is made simple by the regulatory prospects of Basel iii. Therefore, it can be argued that the Basel iii accord as well as all the other regulatory trends are seen to be of great importance in the society Financial Regulations Trends Sample Essay

Financial Regulation during the times of COVID-19

The concepts of COVID-19 and its societal effects has been receiving enormous attention in the previous years. According to Madhav et al. (n.d.), the aspect of health pandemics is of great importance in modern-day society. Due to the concepts of globalization, people can cross the borders easily and this makes the outbreaks of contagious diseases easy to cross the borders. On the other hand, the spread of a contagious health hazard has great effects on different societal aspects. On the other hand, it can be argued that the commonness of health pandemics has been well documented in the past. Donthu and Gustafsson (2020, p. 284) outlined that the spread of COVID-19 is a reminder that health pandemics are possible and will continue to be common in the coming days. The spread of this disease in most of the parts across the world caused great economic turmoil. The implementation of safety measures such as social distancing, self-quarantine, and restricted movements caused great impacts on the global economy Financial Regulations Trends Sample Essay

As a result, companies could not operate and therefore, there was no circulation of finances in the economy.

Besides the harm that the spread of the virus caused by different companies, it can be argued that also the banking sector was greatly affected by this condition. This is true because the spread of COVID-19 greatly caused income loss among the people and companies (Martin, Markhvida, Hallegatte & Walsh, 2020, p. 453). In such an environment, it can be argued that also the banks stand a chance of losing greatly. Due to this aspect, banks have to come up with the best operational standards that will ensure that they stay safe and will resume their normal activities after the pandemic subsides. Therefore, it can be argued that most of the regulatory standards that were set to govern the banks against possible risks were of great help during the times when the economy was down due to the spread of the virus. On the other hand, during the reopening of businesses, there are numerous health standards that the companies have to meet for them to be able to serve the customers. Nevertheless, banks could suffer great financial and business loss during these times if they had no security finances Financial Regulations Trends Sample Essay

This situation depicts the importance of financial regulations in the operations of companies. According to OECD (2020), financial regulations are of great importance during health pandemics, especially during the spread of COVID-19 in 2020. This is true because health organizations have a financial regulatory standard that ensures that the organizations are financially covered. During the spread of COVID-19, patients in the hospitals increase. On the other hand, the hospitals need enough resources to ensure that they take good care of all the patients that are on the facilities. Despite these needs, it is evident that this was a new virus and most people were not aware of the best methods to handle it at the beginning. Due to such conditions, health institutions needed enough resources to ensure that the needed care is ensured. Therefore, financial regulations that ensured that health facilities have some minimum finance requirement is of great importance during such times.

Different scholars as well as sources from the past years have argued that the spread of COVID-19 and its effects on society has provided evidence that such conditions are possible. As a result, different companies, organizations, and enterprises have to put forth some practices that will cater to their operations during such times. One of the greatest sectors that this aspect is greatly applicable is the financial regulation sector. From the above explanation of Basel iii, it is evident that the regulatory aspects call for the banks to meet some minimum requirements of operations. These requirements, on the other hand, are meant to govern the banks during harsh times where more finances would be needed. “Microfinance and COVID-19: A Framework for Regulatory Response” (2020) argued that the customers of microfinance that do not meet the needed regulatory standards are at great risks associated with the financial aspects of the companies.

Therefore, it can be argued that the spread of COVID-19 is an indication that better financial regulatory standards have to be established in all the economic sectors. From the above example, most companies, including banks stand a chance of great suffering when there is economic turmoil Financial Regulations Trends Sample Essay

This is evident from the spread of COVID-19. Due to the lockdown of companies across the world, most of them have lost businesses and therefore may not be able to gain to their previous standards after the COVID-19. Generally, it can be argued that the companies would need extra finances for operation before the economy picks again. This means that some of them are at risk of totally closing down. This is an aspect that highlights the importance of Financial regulations.

Conclusion

The importance of financial regulations has been well documented in the past. On the other hand, it is well established that there are numerous developments in this sector. Generally, the enormous body of literature in this area has contributed to the overall developments in this area. Nevertheless, the need for better financial regulations in the modern-day society is also evident from the modern-day operations. It can be argued that companies in society today need to ensure that they are covered in terms of finances. The fact that there have been several health pandemics in the society in the past shows that this is a condition that will continue to emerge in the coming days. As a result, better operational strategies to govern companies during harsh conditions are needed.

Most of the previous financial regulations were used to govern the operations of banks. Banks always operate with the finances of their clients. As a result, in case any bank goes bankrupt or is affected by any financial crisis, it is evident that the customers may be at great risks. As a result, several regulatory standards have focused on ensuring that banks are well covered. An example is the Basel iii regulatory accord that emphasizes on securing the banks financially. This is a concept that can be implemented in most of the economic sectors including health sectors. The spread of COVID-19 AS one of the most famous health pandemics in the world has greatly caused economic turmoil. As a result, it can be argued that companies that were not covered financially, including the banks are bound to greatly suffer from the financial crisis. However, companies and institutions that were covered financially in that they had some extra income set aside would survive the economic deterioration. As a result, the modern-day financial trends focus on setting such financial and operational minimum requirements for security Financial Regulations Trends Sample Essay

References

“Microfinance and COVID-19: A Framework for Regulatory Response” (2020). CGAP. Retrieved from https://www.cgap.org/research/publication/microfinance-and-covid-19-framework-regulatory-response [Viewed 13 October 2020]

Author, S. (2020). What Is Basel III? Investopedia. Retrieved from https://www.investopedia.com/terms/b/basell-iii.asp#:~:text=Basel%20III%20is%20a%202009,of%20reserve%20capital%20on%20hand. [Viewed 13 October 2020]

Awrey, D., & Judge, K. (2020). Why Financial Regulation Keeps Falling Short. Cornell law school legal studies research paper no. 20-03; European corporate governance institute (ECGI) law working Columbia law & economics working paper no. 617. Retrieved from https://scholarship.law.columbia.edu/faculty_scholarship/2604 [Viewed 13 October 2020]

Carstens, A. (2019). The role of regulation, implementation, and research in promoting financial stability. BIS Management Speeches. Retrieved from https://www.bis.org/speeches/sp190604.htm [Viewed 13 October 2020]

Donthu, N., & Gustafsson, A. (2020). Effects of COVID-19 on business and research. Journal of Business Research, 117, 284 – 289. https://doi.org/10.1016/j.jbusres.2020.06.008

International Federation of Red Cross and Red Crescent Societies (2017). Financial regulations. Retrieved from https://media.ifrc.org/wp-content/uploads/sites/5/2018/02/05_IFRC-Financial-Regulations-2017-FINAL-EN.pdf [Viewed 13 October 2020]

Kodongo, O. (2017). Financial regulations, financial literacy, and financial inclusion: insights from Kenya. Emerging Markets Finance and Trade, 54(12), 2851-2873. https://doi.org/10.1080/1540496X.2017.1418318

Kumar, R. (2014). Chapter 2 – Regulatory Environment of Financial Institutions. Strategies of Banks and other Financial Institutions, 31-60. https://doi.org/10.1016/B978-0-12-416997-5.00002-6

Madhav, N., Oppenheim, B., Gallivan, M., Mulembakani, P., Rubin, E., & Wolfe, N. (n.d.). Chapter 17pandemics: risks, impacts, and mitigation. Disease Control Priorities: Improving Health and Reducing Poverty. (3rd ed.). Retrieved from https://www.ncbi.nlm.nih.gov/books/NBK525302/ [Viewed 13 October 2020]

Martin, A., Markhvida, M., Hallegatte, S., & Walsh, B. (2020). Socio-Economic Impacts of COVID-19 on Household Consumption and Poverty. Economics of Disaster and Climate Change, 4, 453–479 (2020). https://doi.org/10.1007/s41885-020-00070-3

OECD (2020). Strengthening health systems during a pandemic: The role of development finance. Retrieved from https://www.oecd.org/coronavirus/policy-responses/strengthening-health-systems-during-a-pandemic-the-role-of-development-finance-f762bf1c/ [Viewed 13 October 2020] Financial Regulations Trends Sample Essay

Stowell, D. P. (2018). Chapter 5 – Trading. Investment Banks, Hedge Funds, and Private Equity (3rd Ed.). pp. 117-143. https://doi.org/10.1016/B978-0-12-804723-1.00005-0

Teall, J. L. (2018). Chapter 4 – regulation of trading and securities markets. Financial Trading and Investing (2nd Ed.). pp. 113-144. https://doi.org/10.1016/B978-0-12-811116-1.00004-0 Financial Regulations Trends Sample Essay