Financial Regulations – A General Overview
Financial law is a legal theory and discipline on which banking and other financial activities are modelled and regulated. Financial law is an important study in Comparative law. Financial law incorporates international trade, banking regulation and prudence, taxation and ethics in general. Understanding Financial law is important to understanding the development and birth of financial regulation, as well as how the legal framework for financial management is formed and maintained. The study of law and its application in all its dimensions is important for a comprehensive grasp of how our legal system works.
In its basic form Financial law refers to the regulation of financial activities undertaken by companies both domestic and foreign. Financial laws regulate ownership, control, investment and lending of financial services. They also affect the way companies behave in a democratic political environment, such as in self-regulatory groups and international frameworks such as the World Trade Organization (WTO). The primary purposes of financial laws are to provide the resources and assistance to economic organizations to facilitate and improve their interactions with each other and the externalities governing economic activity.
There are many ways in which financial laws regulate financial services. These include general public policy, property and casualty insurance, savings and loans, credit, securities, insurance and trusts, investment and banking. Financial laws also govern the conduct of monetary and fiscal policies.
Financial law attempts to achieve three main goals. Firstly, it tries to create a balanced system of private and public finance. Secondly, it aims to maintain financial intermediaries that enable easy access to finance and provide insurance and security to those who require it. Thirdly, it attempts to promote efficient and timely financial operations and minimise risks in the financing and restructuring of financial relationships. Financial intermediaries are defined as those organisations that provide financial advice, investment, and financial protection and management to their clients.
Financial regulation in modern society is governed by a body of laws known as Financial Regulations. The primary objective of these regulations is to maintain the efficiency and growth of the financial market, while providing for the protection of the public at the same time. Financial regulation also seeks to ensure the stability of financial markets by developing appropriate measures that protect the monetary and fiscal balance. Financial regulation also promotes long-term growth of the economy through the efficient management of its finances.
The fourth objective of financial law is to create a better environment for economic activity. In this sphere, there are two important objectives – encouraging growth of the economy through proper regulation and discourage inappropriate investment. Financial regulation in modern society encompasses a wide range of activities, including internal and external controls, and interest rates on loans and other financial activities, taxation of financial transactions, and effective supervision of financial institutions.
Financial regulation is closely linked to the development of economic policies and foreign exchange rates. The promotion of international trade and the maintenance of competitive advantage are also some of the objectives of financial regulation. Another important area of focus in financial law is international relations, which encompasses aspects such as trade, finance and diplomacy. In other words, it is closely connected to issues of foreign policy. The global economic crisis has led to the growth of interest among people in studying international relations, thus bringing into prominence the issue of international finance.
The five basic objectives of financial law are preventing the abuse of credit, providing for the protection of funds and promoting competition. Financial regulation helps resolve the problems associated with financing transactions and the functioning of financial institutions. Today, the financial services sector is the United States’ largest industry. In the past, financial regulation was limited to banks and other financial institutions, but now, financial laws are applicable to all types of financial institutions, including corporations, governments, and other organizations involved in the business of financial services.