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.
