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Financial Deregulation and Capital Control - Essay Example
This paper “Financial Deregulation and Capital Control” will attempt to discuss important aspects of international financial markets which have led to bring such development. The overall discussion will be presented in four major sections followed by a concluding remark. …
The importance of the financial deregulation has started to rise with increasing opportunities in the global market place. Financial deregulation can be referred as abolishment of restrictive laws that often cause barriers for the financial institutions. Financial deregulations are important and similar as the free trade policies. Both, the financial deregulation and free trade policy strive to bring development in the market by increasing competition Hope and Maeleng have defined the free trade policies as “competitor-enhancing device” as it is meant to discard the unnecessary restriction and barriers by offer better opportunities to the international as well as the domestic business organizations (Hope and Maeleng, p.61). In the same manner, the financial deregulation strives to offer freedom to the financial institutions for the better performance of industry that will further bring a positive impact on the entire economy.
On the other hand, the capital control is the process of the taking necessary steps for regulating the limits of the capital inflow as well as outflow. In order to implement capital control within an economy, the regulatory bodies uses the certain economic tools like taxes, interest, FDIs, volume restrictions, tariffs and other market based forces. The capital control have an direct impact on the financial assets classes like bonds, equities, mutual funds, foreign exchange rates etc. ...