The Unintended Consequences of Banking Regulation

The video discusses the new financial environment and its unintended consequences, focusing on the fixed income markets where bank retrenchment has concentrated risk. It highlights liquidity issues and increased trading friction due to regulatory measures. The challenges of recruiting for big banks are explored, with a shift in focus to the buy side. The discussion concludes with the impact of regulation on private markets and the need for simpler capital requirements.

What is one of the unintended consequences of financial regulation in the fixed income markets?

• Improved liquidity

• Increased number of banks

• Concentration of power and risk

• Decreased systemic risk

How has the focus of business activities shifted according to the second section?

• Towards larger hedge funds and asset managers

• Towards individual investors

• Towards smaller banks

• Towards government bonds

What is a proposed solution to the issues caused by over-regulation?

• Simplifying regulations

• Reducing capital requirements

• Increasing the number of banks

• Eliminating private markets

What effect does the EU's compensation curtailment have on banks?

• Increases their operations in New York

• Decreases their ability to operate in New York

• Encourages more hiring

• Has no effect on their operations

What happens when regulations are too complex according to the third section?

• It increases public trust

• It leads to an explosion in private markets

• It reduces the number of intermediaries

• It simplifies the market