Answered: outline and critically discuss five (5)…

Business

Finance

outline and critically discuss five (5) common justification or rationale of bank regulations

Contemporary Auditing

11th Edition

ISBN:9781337650380

Author:KNAPP

Publisher:KNAPP

Chapter3: Internal Control Issues

Section3.4: First Keystone Bank

Problem 1Q

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Concept explainers

Regulation of Commercial Banks

The main function of any commercial bank is accepting deposits and lending money to borrowers. Apart from these two activities, commercial banks provide a host of other services to their customers, like discounting bills of exchange, acting as a custodian of a customer's will, and so on. In the absence of a proper regulatory framework or proper regulations in place, the commercial banks would have ended up charging exorbitant or varied rates of interest or service charges on the funds loaned by them or the services performed by them.

Question

Banking is generally a highly regulated industry, and government restrictions on financial activities by banks have varied over time and locations. You have been appointed as an adviser to the governor of Bank of Ghana (BoG), outline and critically discuss five (5) common justification or rationale of bank regulations.

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