What is the bank order?

The Banking Regulation reflects the legal structure that the financial institutions must observe in a particular region. Although these rules differ depending on the region in which the company is established, they are introduced to provide a level of transparency and access to capital for investors. Financial fraud also occurs under banking regulation, but these laws are introduced to alleviate unethical practices and support transparent banking behavior. A strict violation of these laws can guarantee the overwork of the regulatory environment in the banking system of the region.

Financial institutions may have some of the largest balance sheets or lists of assets and lists in any industry. Banks not only create large amounts of money through deposits, but financial institutions are largely responsible for lending money to other businesses, which affects their own loan. Without properly regulating banks in the region, banks have the ability to cause systemic risk in regional economy. Systemic riskIt is a possibility that the bank's failure will affect the further industry of the economy and lead to a wider financial failure.

Another purpose of the bank regulation is to detect and prevent fraud between financial institutions. Even in the most developed economies, banking regulation is sometimes insufficient. In 2008, Bernard L. Madoff was arrested and eventually convicted of deceiving investors from billions of US dollars (USD) in the Ponzi system. Although his company was a broker dealer and not a bank, it was regulated according to the US Securities and Stock Exchange Commission, the same regulatory body that oversees banks in the United States. Madoff's fraud was not originally found for decades and led to the reworking of financial supervision in the US that followed.

There are also banking laws that provide a level of transparency for investors. The regulatory body in the great economy requires that a certain publication be made noa hard time. The bank must publish a debt compared to its own capital so that customers and other members of the investment community are aware of the possible risks associated with the bank. In addition, there are certain banking laws that require banks to maintain minimal capital conditions that are a measure of the bank's financial stability usually in relation to its debt obligations.

The

regulation in the banking industry is also introduced that regulatory bodies can maintain cards in financial institutions. Regulators acquire access to data for each registered bank. It is a useful tool in monitoring various banks operating in the region and executives who supervise these financial institutions.