Abstract
The key justification for introducing financial regulations is based on the idea that financial markets are imperfect and that regulations can effectively correct these shortcomings. The various areas of regulations considered in this chapter have all sprung into existence due to these considerations. Since customers often have asymmetric information regarding the operations of the banks, licensing and disclosure requirements are put forward to restrict the possibility of improper activities while providing the investors with adequate information. Capital requirements are an attempt to contain the risk-taking incentives of the owners of banks. The powers granted to the supervisors ensure that they have access to adequate information on the financial intermediaries and can act in a timely and efficient manner when troubles arise. Deposit insurance schemes are put forward to mitigate the likelihood that imperfectly informed depositors lead to a bank run. Credit information availability is crucial to overcome credit rationing, which arises when the financial intermediaries have limited information on borrowers.
Access this chapter
Tax calculation will be finalised at checkout
Purchases are for personal use only
Preview
Unable to display preview. Download preview PDF.
Author information
Authors and Affiliations
Copyright information
© 2014 Rym Ayadi and Sami Mouley
About this chapter
Cite this chapter
Ayadi, R., Mouley, S. (2014). Impact of Bank Regulations on Growth. In: Monetary Policies, Banking Systems, Regulatory Convergence, Efficiency and Growth in the Mediterranean. Palgrave Macmillan Studies in Banking and Financial Institutions. Palgrave Macmillan, London. https://doi.org/10.1057/9781137003485_7
Download citation
DOI: https://doi.org/10.1057/9781137003485_7
Publisher Name: Palgrave Macmillan, London
Print ISBN: 978-1-349-43424-4
Online ISBN: 978-1-137-00348-5
eBook Packages: Palgrave Economics & Finance CollectionEconomics and Finance (R0)