Financial regulation is designed to protect investors and ensure market stability from "summary" of How Finance Works by Mihir Desai
Financial regulation plays a crucial role in safeguarding the interests of investors and maintaining the stability of the market. By imposing rules and standards on financial institutions and market participants, regulators aim to prevent fraudulent activities, ensure transparency, and promote fair and efficient markets. One key aspect of financial regulation is investor protection. This involves creating a framework that safeguards the rights of investors, such as ensuring that they have access to relevant information to make informed decisions, and protecting their assets from misuse or mismanagement by financial institutions. Additionally, financial regulation also seeks to promote market stability. This is achieved through various measures, such as monitoring and controlling systemic risks that could lead to market disruptions or financial crises. By setting prudential standards for financial institutions an...
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