Finance is the base for economics and there are macroeconomics and microeconomics which are different. There are market forces that drive the economy and macroeconomics is there to promote a market equilibrium. Profit maximization is the primary driver of microeconomics, and that is why businesses try as much as possible to make more profits. Financial and securities regulation is when there are set rules by a governing body that are meant to make financial and security institutions to adhere to them. Both government and non-governmental institutions can be tasked with carrying out financial regulation. Financial regulations controls the kind of services and products that are provided by banking institutions. To protect the consumers, achieve financial stability and market confidence are the main objectives of financial regulators.
Policy usually affects the operation of financial systems through financial supervision and regulation. When there is financial regulation, that promotes efficient functioning of financial systems through absorption of shocks. occurrences of shocks is what leads to the disruption of the financial system, and that can have adverse economic consequences. An alteration on the prices of goods and services can cause economic downturn. When the prices of goods has fallen, that increases debt, and hence firms cannot borrow for their development and sustenance. There are three factors that can lead to financial instability, and these include increase in indecision, negative shocks of firms or organizations and upsurge of interest rates. Credit rationing might result when there is increased uncertainty. All over the world, there are different combinations and steps for monitoring the activities and actions of various financial regulation institutions.
When you are making any decisions that touch on your business, it is important that you have accurate financial information. It is easy to know what is happening in a business when you have the personnel who have the experience and skills to take care of all the financial aspects of the business. It is important for a company or business to have their financial statements because that will assist in the making of decisions. The information that is availed by statements provide a basis where a business can get feedback on where adjustments need to be made. Efficient financial sector regulation ensures that there is confidence in the financial sector and enhances confidence among business people.
The manner in which financial aspects are handled is different mainly because of the changes in times. The construction of financial regulation has changed and what has contributed to this is legal and geographic boundaries. What determines the financial stability of one person does not apply to the other, and that is why you need to base on some aspects.