Regulations and deregulations in the banking industry.
Student Nikolett CSÁSZÁR2
Student Ioan Alexandru GHERASIM3
This paper examines the ba nking r egulatory frameworks tha t were enforced from
the 1980 to date and see if there is a cyclical tendency in the patterns of r egulations a nd
deregula tions. To analyse this, we look at 10 acts or key events from the US banking
industry and compar e them against var iant macr oeconomic indicators. The result shows
that lawmakers imposed deregulations upon the banking industry in moments of economic
growth and regula tory measur es after a period of economic downturn. This has some
serious implica tions for policy making. In the end, we attempt to conclude whether
lawmakers shou ld back off a nd have a hands off approach to banking industry or if they
should permanently regula te.
Keywords: Ba nking ind ustry, Deregulation, Legal frameworks, Macr oeconomics,
Institutional Cha nge.
JEL Classification: K23
What is deregulation in the business environment?
In the past two decades as mentioned by Guasch and Hahn4 there have
been two trends in regulation. The first one referring to the increase of new
regulations related to different economic sectors such as health, safety and the
environment and the other referring to economic deregulation of certain industries
such as financial markets.
First of all when we discuss about deregulation it is important to explain
what a regulatory environment is, and why these occur. As a simple explanation we
can say that the regulatory environment refers to an environment where laws, rules
and regulations are put into force in order to regulate certain business operations
1 Mircea I. Gherghina – Bucharest University of Economic Studies, Facult y of International Business
and Economics, 3rd Year, firstname.lastname@example.org
2 Nikolett Császár - Bucharest University of Economic Studies, Faculty of Intern ational Business and
Economics, 3rd Year, email@example.com
3 Ioan Alexandru Gherasim - Bu charest University of Economic Studies, Faculty of In ternational
Business and Economics, 3rd Year, firstname.lastname@example.org
4 Guasch L. J., Hahn W. R., The Costs and Benefits of Regulat ion: Implications for Developing
Countries, The World Bank Observer, vol. 14, no. 1, 1999, pp.137-58