chapter  1
17 Pages

Impact of regulation on competition in commercial and investment banking

ByAnoop Rai, George J. Papaioannou, A. Sinan Cebenoyan

Financial institutions play a unique role in the saving-investment process of an economy by participating in the creation of credit and mediating the fl ow of funds between savers and investors. They also assist central banks in their implementation of monetary policy by serving as conduits in achieving money supply and interest rate targets. The failure of a major commercial bank can have a signifi cant negative impact on these functions and disrupt the saving-investment process, hurting the real sector of the economy.