Financial Markets (2).

Business Education Finance General

Financial markets Many people believe that not investing in a market does not have an impact on an individual. This is not true because when a market crashes it affects the companies and also the people working in those companies. If I am working in a company, fluctuations in the market could have an effect on my benefits offered to me as an employee like retirement, healthy care and dental plans. Unstable economy could have an effect on my retirement plan because I might not be able to put anymore funds in that plan. It is very common for banks to tighten their lending standards making it hard for people to get a loan. At the time of market clash companies try to lower their expenditure and starts firing people to keep the costs to a minimum hence I could get fired from my company if my company decides to lower its expenditure. [Guaranteed (2015)]. At the time of financial crisis the Federal Reserve tries to reduce the negative impact of it to a minimal level. To reduce the impact of a financial crisis the Federal Reserve could lower the short term policy rates; they could provide loans to those financial institutions whose failure could undermine the confidence in financial system. The Federal Reserve could enhance the oversight of supervision of the financial institutions; the supervision should not be limited to individual institutes instead but on the financial institutes as a whole. [David L. Kohn (2010)]. Supervision is required to make any institute work effectively as supervision requires the institute to adhere to all the rules and regulations and if any shortcomings are found then it is requested to resolve them. I believe that the role of Federal Reserve is very important to keep a sound financial system. As the…

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