For this assignment, you will write a minimum three-page paper (not including APA title or references pages). In this paper, please address the following questions:

• What are the specific ways banks impact the economy?
• How was the regulatory environment revised?
• Is the regulation effective?
• What risk management standards had to be employed as a result of legislation?
• What are the consequences of failure to meet the standards outlined by regulators?
• Would a firm be prudent to properly manage their level of leverage and liquidity if it were not regulated? Why or why not? What tools can organizations employ to manage these risks?

Answer preview

According to Borio, and Drehmann, (2009), a bank is a financial institution which accepts deposits and lends money to the people or businesses. Also, the banks play in the financial system crucial role in impacting the economy. Banks acts as an intermediary between people who have a deficit of income with the people who have a surplus. Banks gives credits typically at interest rates which are payable over a given period. People holding deposits expects to withdraw at demand.  Currently, the number of banks keeps on proliferating in the economy…