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Provide one argument for and one argument against further deregulation of banking.

Provide one argument for and one argument against further deregulation of banking.

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Answer #1

For: The fact is that banking sector is not competitive due to the high regulations. Sometimes, these high regulations works as the entry barrier for lending to potential entrants. So banking sector behaves more or less like an oligopoly industry.

Against: Deregulation of banking sectors may lead to the uequal lending distributions as not everyone is capable of giving high colateral demand for borrowing. This may also work as an entry barrier if there is some potential entrants for an industry and he is efficient as well, but can not borrow money from banks due to unavailabilty of colateral.

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