Unit 3 Flashcards
What is Fiscal Policy?
Government’s use of taxation and government spending to influence the economy
What is Monetary Policy?
Actions of country’s central bank to control money supply, interest rates, inflation in the economy
How can Banking Regulations impact financial services?- Political factors
Affect how banks operate, including capital requirements and risk management.
How can Consumer Protection Laws impact financial services?- Political factors
Regulations ensuring fair practices, such as transparency in loans and fees, impact financial institutions’ operations.
How can Tax Policies impact financial services?- Political factors
Corporate tax rates, capital gains taxes, and financial transaction taxes influence investment decisions and profitability in the financial sector.
How can Stable Governments impact financial services?- Political factors
Countries with stable governments attract investment, while political instability (e.g., coups, corruption, or weak institutions) creates uncertainty and risk.
How can Election Cycles impact financial services?- Political factors
Policy changes due to elections can shift financial markets, as different administrations have varying approaches to regulation and taxation.
How can Trade Agreements & Tariffs impact financial services?- Political factors
International trade policies affect currency exchange rates, foreign investments, and financial market confidence.
How can Interest Rates & Monetary Policy impact financial services?- Political factors
Central banks (e.g., the Federal Reserve, European Central Bank) influence financial services by adjusting interest rates and controlling money supply.
How can Inflation Control impact financial services?- Political factors
Government actions to manage inflation through fiscal and monetary policy impact banking, lending, and investment returns.
How can Sanctions & Trade Wars impact financial services?- Political factors
Restrictions on countries or industries (e.g., U.S. sanctions on Russia or China-U.S. trade tensions) impact financial markets and international banking.
How can Global Economic Alliances impact financial services?- Political factors
Membership in economic groups (e.g., the EU, WTO, or G20) influences regulations, foreign investments, and cross-border banking operations.
How can Exchange Rate Policies impact financial services?- Political factors
Government intervention in currency valuation affects international trade and financial markets.
How can Regulation of Fintech & Cryptocurrencies impact financial services?- Political factors
Governments may impose strict regulations or bans on financial technologies like blockchain, cryptocurrencies, and digital banking.
How can Data Protection Laws impact financial services?- Political factors
Laws impact how financial firms handle customer data.
How can Cybersecurity Policies impact financial services?- Political factors
Governments require financial institutions to implement strict cybersecurity measures to prevent fraud and data breaches.
How can Green Finance Regulations impact financial services?- Political factors
Many governments encourage or mandate sustainable investing and lending practices to support environmental initiatives.
How can Carbon Taxes & Emission Regulations impact financial services?- Political factors
These policies affect industries that financial institutions invest in, influencing portfolio risks and returns.
How can Corporate Governance Requirements impact financial services? - Political factors
Increased focus on social responsibility in financial services, including ethical banking and transparent operations.
How can Stricter Banking Rules impact financial services? - Government decisions
Governments can impose higher capital requirements, lending restrictions, or stricter compliance measures
How can Deregulation impact financial services? - Government decisions
Reducing regulations can encourage growth but may increase financial risks (e.g., U.S. deregulation of banks before the 2008 financial crisis).
How can Consumer Protection Laws impact financial services? - Government decisions
Laws aim to prevent unfair lending practices and increase transparency in financial transactions.
How can Raising Interest Rates impact financial services? - Government decisions
central banks increase rates to fight inflation, making borrowing more expensive and slowing economic growth.
How can Lowering Interest Rates impact financial services? - Government decisions
Reducing rates makes credit cheaper, stimulating investment, borrowing, and economic activity.
How can Corporate Tax Changes impact financial services? - Government decisions
Higher taxes on banks or investment firms can reduce profits, while tax cuts can encourage growth.
How can Nationalization of Banks impact financial services? - Government decisions
In extreme cases, governments take control of failing banks, as seen during financial crises.
How can Capital Gains Taxes impact financial services? - Government decisions
Higher taxes on investment profits can discourage stock market participation and financial sector growth.
How can Financial Transaction Taxes impact financial services? - Government decisions
Some governments propose taxes on stock trades or cryptocurrency transactions, affecting market liquidity.
How can Stimulus Packages impact financial services? - Government decisions
Large-scale government spending (e.g., COVID-19 relief packages) can boost the economy and financial markets.
How can Austerity Measures impact financial services? - Government decisions
Cutting government spending to reduce debt can slow economic growth and affect banking profits.
How can Public Debt Management impact financial services? - Government decisions
High government debt levels may lead to higher interest rates or economic instability.
How can Tariffs & Trade Barriers impact financial services? - Government decisions
Restrictions on trade can impact international finance, currency values, and investment flows.
How can Foreign Investment Regulations impact financial services? - Government decisions
Limiting foreign ownership in banks or financial institutions can restrict capital inflows.
How can Cryptocurrency Regulations impact financial services? - Government decisions
Governments may regulate or ban cryptocurrencies, impacting digital banking and investment markets.
How can Sanctions & Restrictions impact financial services? - Government decisions
Governments imposing sanctions on certain countries or businesses (e.g., Russia, Iran) can limit access to financial services.
How can Fintech & Digital Banking Rules impact financial services? - Government decisions
Regulations on online banking, peer-to-peer lending, and AI in finance affect industry growth.
How can Data Protection Laws impact financial services? - Government decisions
Policies like GDPR (EU) and CCPA (U.S.) impact how financial firms manage customer data and cybersecurity.
How can Green Finance Regulations impact financial services? - Government decisions
Mandating sustainable investment practices impacts financial institutions’ lending and investment strategies.
How can Carbon Taxes & Emissions Limits impact financial services? - Government decisions
These can affect industries that banks invest in, influencing market risks.
How can Corporate Governance Laws impact financial services? - Government decisions
Stricter ESG (Environmental, Social, Governance) requirements force financial firms to adopt responsible practices.
How can Capital Controls impact financial services? - Government decisions
Some governments limit foreign currency exchange to stabilize their economy
How can Currency Devaluation impact financial services? - Government decisions
Governments may manipulate currency values to boost exports but can also create inflation and economic instability.
