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Managerial Economics 2nd Edition by William Boyes
Edition 2ISBN: 978-0618988624Managerial Economics 2nd Edition by William Boyes
Edition 2ISBN: 978-0618988624 Exercise 2
The Dodd-Frank financial regulation law (enacted in 2010 in reaction to the 2008-2010 financial crisis) establishes tighter requirements for capital and restricts risk-taking. It also contains a significant consumer watchdog component and seeks to prohibit banks from becoming too big to fail. The so-called Volcker Rule-named after White House economic adviser and former Federal Reserve chairman Paul Volcker-restricts to 3 percent of Tier 1 capital the amount banks can hedge or put into private equity. Any financial entity that is deemed "too big to fail" is subject to regulation by the Federal Reserve. The costs of complying with the law are considerable. Many financial firms took write-downs in 2010 in anticipation of the effects of the law on their earnings.
How do firms subject to serious government regulation succeed?
How do firms subject to serious government regulation succeed?
Explanation
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Verified
Case summary:
A financial regulation law DF that is enacted in 2010 establishes the strong requirements on risk-taking and for capital. The law contains consumer watchdog component to protect banks from becoming too big to fail. Rule V restricts 3 percent of the capital of the banks. Financial organizations, which are considered as too big to fail, would be subject to the regulation of Federal Reserve.
Determine why companies, which follow serious regulation, succeed:
The companies, which take the regulations and governance of the government mostly, succeed in today's scenario. Companies without regulation will run the process and business in its own format, which may cause damage to the environment.
Regulations of the government usually structured with the consideration of environment, company, and other aspect. Thus, following government regulation will cause no harm to the society and to the company.
Conclusion:
Companies make or follow regulation that benefits them and the regulation, which creates them profit. Thus, it may harm the society or economy in any aspects.
A financial regulation law DF that is enacted in 2010 establishes the strong requirements on risk-taking and for capital. The law contains consumer watchdog component to protect banks from becoming too big to fail. Rule V restricts 3 percent of the capital of the banks. Financial organizations, which are considered as too big to fail, would be subject to the regulation of Federal Reserve.
Determine why companies, which follow serious regulation, succeed:
The companies, which take the regulations and governance of the government mostly, succeed in today's scenario. Companies without regulation will run the process and business in its own format, which may cause damage to the environment.
Regulations of the government usually structured with the consideration of environment, company, and other aspect. Thus, following government regulation will cause no harm to the society and to the company.
Conclusion:
Companies make or follow regulation that benefits them and the regulation, which creates them profit. Thus, it may harm the society or economy in any aspects.
Managerial Economics 2nd Edition by William Boyes
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