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Types Of Regulation - Coggle Diagram
Types Of Regulation
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Deposit Insurance
The government can insure people depositors to a financial intermediary from any financial loss if the financial intermediary should fail.
Similar government agencies exist for other depository institutions which is the National Credit Union Share Insurance Fund (NCUSIF) provides insurance for credit unions.
For example:The Federal Deposit Insurance Corporation (FDIC) insures each depositor at a commercial bank or mutual savings bank up to a loss of $250,000 per account.
Restriction on Entry
Regulators have set up a compact regulations as to who is allowed to set up a financial intermediary
For example individuals or groups that want to start a financial intermediary,such as bank or an insurance company,must obtain a charter from the state or the federal government.
They are upstanding people with faultess credentials and a large amount of initial funds will they be given a charter.
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Limits on Competition
Although the evidence that unbridled competition among finacial intermediaries promotes failures that will harm the public is extremely weak,it has not stopped the state and federal governments from imposing many restrictive regulations.
For example,in the past,banks were not allowed to open up branches in other states,and in some states banks were restricted from opening additional locations.
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