Bank Regulation vis--vis Other Industries Essay

Bank Regulation vis--vis Other Industries - Essay Example Banks do not offer warranty or guarantee for the security of the deposits whereas the majority of other firms provide either a warranty or guarantee for the soundness of their products and services and therefore require less regulation.†¢ Banks do not offer warranty or guarantee for the security of the deposits whereas the majority of other firms provide either a warranty or guarantee for the soundness of their products and services and therefore require less regulation.†¢ As bank investments are not made quite often as compared to the habitual purchase of other goods and services, the consumer gets very little time to observe and learn.†¢ Investments once made in banks seldom offer opportunities to correct the mistakes, whereas greater chances of rectification of errors exist in the firms of other goods and services.†¢ The degree of trustworthiness in the case of banks is not easily accessible as compared to the reliability of most of the firms providing other go ods and services.†¢ Comprehensive knowledge about the soundness and risk ness of the claims offered by the banks is lacking which requires additional regulation of these financial institutions as compared to most of the firms in other industries.†¢ The value can be ascertained only after a considerable period of time and not at the very moment of accepting bank proposals. This adds to the rationale of imposing extra regulation over banks than nonfinancial goods and services where in most of the cases the value can be easily ascertained.