Maintaining safety and soundness of the financial system

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1. The role of Bank Regulation has become increasingly complicated in maintaining “Safety and Soundness” of the Financial System.

a. What is Micro-Prudential Supervision of banking institutions?

b. What is Macro-Prudential Supervision of banking institutions?

c. What is the Basel Accord and its relevance to Saudi Financial institutions?

2. The 2000s witness a dramatic increase in Financial Engineering that produced a wide range of new loans and investment products.

a. What is Financial Engineering?

b. Provide examples of consumer loan products and investment securities.

c. How did Financial Engineering affect Adverse Selection and Moral Hazard problems prior to the 2008 Financial Crisis?

3. A major issue that has arisen after the 2008 Financial Crisis is the debate over “Too Big to Fail” financial institutions.

a. What are “Too Big to Fail” financial institutions?

b. What are the major concerns with the size of these corporations?

c. What do you think is the appropriate response for solving this problem? Explain with examples.

Reference no: EM13977212

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