Question

use economic arguments to justify regulation of both financial institutions and financial markets

use economic arguments to justify regulation of both financial institutions and financial markets

Homework Answers

Answer #1
  • Both regulation of financial markets and financial institutions is necessary to prevent the exploitation of the investors and the borrowers.
  • RBI needs to control the working of financial institutions in order to make the funds available to the borrowers at an appropiate rate.
  • SEBI needs to control the financial market and the intermediaries in order to ensure that the investors get a minimum rate of return on the amount invested by them because every investor expects high return if he is ready to bear higher risk.
  • Further both the financial market and financial institutions are interlinked with each other, working of both in a balanced manner can help the economy to grow at a large scale.
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