Reference no: EM133118229

Question - Project - The Banking System - The functionality of a nation's financial system is critically important to the health of its economy. Transmitting funds from individuals and entities with a surplus to parties with a productive use for funds is the predominant component of a high functioning financial system. Imagine if financial institutions consistently provided large amounts of capital to parties without performing the proper due diligence, thereby sustaining substantial losses. This would undoubtedly have an adverse impact on the economic conditions.

The consensus among scholars and academics alike is that the private banking industry has been insufficiently monitoring investments, especially prior to the recent financial crisis. The lack of regulations led to inappropriately relaxed risk management environments within banks, causing the near collapse of the global economy in the late 2000s.

Required - Your employer, Capital Financial, is a member of the local chamber of commerce. They have been asked to deliver a lecture on banking, regulatory standards, and managing risk.

1. What is the role of the banking system in the economy?

2. Identify and assess two functions that banks play in the economy.

3. Identify two examples that demonstrate the adverse economic impact of ineptitude in banking and offer techniques to mitigate this impact.

4. How has the regulatory environment of the banking system changed in the last 15 years?

5. Are the regulations effective? Why or why not? Please provide a rationale to support your answer.

6. What standard operating procedures did banks have to employ as a result of regulatory changes?

7. What are the consequences of failing to meet the standards outlined by regulators?