Financial Institutions and Organizations Essay Example | Topics and Well Written Essays - 1250 words

Financial Institutions and Organizations - Essay ExampleBased on this data, the authors dodging the best possible way to proceed and make a series of recommendations to support their argument. The central recommendations of Barth, Caprio, and Levine argon organized around five distinct characteristics. The authors assert that adherence to these required characteristics will prevent the tolerant of widespread crisis that has been unfolding across the world, and will impose a level of fundamentalized guardianship that has been to date nonexistent. The first recommendation by the authors is that the authoritative institution and overseer of market regulatory agencies be self-directed of short-run politics (203). Clearly, an effective system of regulation will need to be enforced by a legitimate and separate institution that is still subject to accountability measures and inquiry by the unexclusive it serves. With massive corruption and greed being such a prominent factor in the st inting get out, this aspect of guardianship would enable a built-in protection for consumers, the fiscal sector, and the political sector alike. When thither is a method for preventing unfair and inappropriate practices, all parties will benefit. Additionally, the requirement that the organization be discharge of political sway will entrust a more consistent guardianship that is external to the decline and flow of political events and party favoritism. The second recommendation of Barth, Caprio, and Levine is that the regulatory agency be independent of the pecuniary services industry (203). This follows a similar rationale as the requirement of political independence how could the semipublic possibly have confidence in a financial regulatory agency if it was run from deep down the industry? To prevent even the perception that the agency could be influenced by the greedy and self-serving motives of the financial industry, it will have to exist entirely outside the industry. C ertainly the publics view of the collapse includes the understanding that the root cause was due at least in part to the industrys faulty self-monitoring and widespread greed. The authors third recommendation is that this authoritative institution should have the power to demand and become randomness necessary for assessing and monitoring the Guardians of Finance (203). This attribute would require transparency from the financial sector and would allow the monitoring authority to have access to accurate, current, and thorough data. This requirement would have an impact on numerous levels first, the financial entities would act more prudently, knowing that they could be asked to share the information at any time, and second, the information in and of itself would have guaranteed accuracy and therefore a better chance to make a unequivocal impact. Had this type of regulation been in place in the early 2000s, a better assessment of change practices and their impact on the economy c ould have prevented the widespread adaptation of loan standards that were lowered to the point of nonexistence. This institution could use the information to compile analysis but also to report back to the public in a way the public could understand. Fourth, the authors assert that the institution should contain the multidisciplinary expertise necessary for fruitfully touch that information (203). If the institution is comprised solely of experts in one area of finance or economics, it will not be nearly as effective as if it were well-rounded. For example, experts on the