Does bank regulation help customers?
The answer, says Federal Reserve Bank of Philadelphia President Anthony Santomero, is yes, no, and maybe. Yes, the government must absorb some of the risks inherent in the banking system in order to maintain the system's stability. No, regulations that ignore the self-interested reactions of both bankers and their customers will not serve those customers well. And maybe, bank regulations, in principle, can help if they increase competition or the flow of information. In practice, however, some regulations designed to improve the quality of information have met with mixed success. President Santomero suggests that focusing on improving both financial literacy and information disclosure might be more productive.
Volume (Year): (2002)
Issue (Month): Q2 ()
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