Research on the Impact of Deregulation on Investment Banks

Bangda Yuan ()
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Bangda Yuan: University of Hull, Department of Accounting and Finance

A chapter in Proceedings of the 2022 International Conference on Economics, Smart Finance and Contemporary Trade (ESFCT 2022), 2022, pp 627-638 from Springer

Abstract: Abstract Deregulation is the process by which governments reduce the regulations in some areas. In some necessary cases, it can remove the regulation. This paper mainly focuses on deregulation in the economic and financial areas. In the 1970s and 1980s, it became very popular due to the efficiency of government regulation and the shift in people's economic thinking. But as deregulation has evolved, it has had a huge economic impact on the world economy and caused great controversy. Deregulation is a way by the government to promote economic growth and build open and competitive markets. But contrary to what has often been assumed, deregulation is often followed by increased systemic risks and the cost of negative externalities in the financial system. Although the government has been harmonizing the public resources, the problem does not seem to have been completely resolved. In this paper, after introducing the historical background and advantages/disadvantages of deregulation, the author investigates the impact of deregulation on investment banks and considers the way how large investment banks operate in the current economic context. This research method is based on Operational data from large investment banks (e.g., Morgan Stanley, JPMorgan Chase and Goldman Sachs) to study the deregulation. The findings in this paper indicate that investment banks can no longer respond to the new situation of deregulation the way they operate today. The investment banks need to optimize the traditional LBO approach and M&A, and open up more financial operations.

Keywords: Deregulation; Investment banks; The Economic Growth; Regulatory Relief and Consumer Protection Act (S. 2155); CFPB Solvency and Qualifying Mortgage Provisions (search for similar items in EconPapers)
Date: 2022
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Persistent link: https://EconPapers.repec.org/RePEc:spr:advbcp:978-94-6463-052-7_73

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DOI: 10.2991/978-94-6463-052-7_73

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