Quite understandably, this virus from the US economy spread at an exponential rate to other economies of the world depending on the level of their linkage with the US financial system and economy (Davies & Green, pp. 10-18, 2008).
The concept, idea, or talk regarding the regulation of financial industry and more importantly the financial system is not a modern concept but after every major financial crisis, many authorities repeatedly emphasized its stronger implementation or modification in one form or the other. These debates turned into heated ones after the collapse of ‘Lehman Brothers in 2008, MCI inc. or WorldCom in 2004 and Enron in 2001 since underlying reason behind their collapses were accounting frauds and scandals’ (Goldsmith, pp. 8-11, 2009). It was after the crisis of 1990s when big names like the US treasury, International Monetary Fund, US Federal Serve, G8, World Bank and others decided that the world needed stronger financial regulations. The compliance largely came through peer pressure and political influence of US and other European countries (Roberts, Weetman, & Gordon, pp. 63-68 & 115-117, 2005). The countries, banks, and firms that would comply better with these regulations and standards would receive more support and would gain better access to finance than the others would. Before the 1990 crisis, these institutions were preaching “liberalization policies” with two basic principles of free market and lesser government intervention (Goldsmith, pp. 8-11, 2009). However, the 1990 crisis and the subsequent accounting scandals forced them to shift from “liberalizing the markets” to “standardizing the markets”. Nevertheless, the dilemma was that it forced these institutions to withdraw from the position of lesser government intervention to multilateral government intervention through a set of political process to regulate the markets (Davies & Green, pp. 10-18, 2008). Despite the fact that billions of dollars have been