Learning More About Financial Regulation in Microeconomics and Macroeconomics
Microeconomics and macroeconomics are two disciplines in economics that any economics student is very much familiar with. And unfortunately, both disciplines are no fan of each other. Currently, changes toward the financial services industry are palpable. There are many forces that affect the current financial regulation of the country. In the present-day financial services industry, there are two major forces that are coming face to face. When it comes to business students, they often lean toward microeconomics. In this set-up, profit maximization is the overall goal. Businesses can make as much money as possible through fixed costs and marginal costs. In simple terms, how CEOs view the world is what microeconomics is all about. It is the job of the CEO to do what they can for the benefit of the company for it to deliver value and make more money.
On the other hand, macroeconomics is very much attractive to policy geeks. The goal of this economic discipline is to attain equilibrium of the market. This implies that whatever services or goods are in the greatest number, they can be exchanged at prices that are mutually agreed by both sellers and buyers. There is good competition between businesses in this set-up. The use of oligarchies and monopolies is bad. Macroeconomics essentially looks at the world using the eyes of the government. This means that it tries to make everyone happy or perhaps equally unhappy.
By looking at the differences of these two perspectives, you know very much that they will be going against each other. Though most people are aware that efficient markets will benefit everyone, the steps to get there that the government must take often go against the microeconomic business interest. If necessary, the government, especially the financial industry, may block a merger so that they can promote competition in businesses. For sellers and buyers to make informed decisions, too, legislation of disclosures may be necessary. Imposing prohibitions and regulations for certain activities may also be necessary so that some will not be put to harm financially.
While it may be annoying to see the government and business sectors fighting over market regulations, it is expected. However, you should know that if the economy is on the rise and everyone is quite happy, the power struggle between microeconomics and macroeconomics stops. If a business makes money, it means that it is happy. Consumers are equally happy too because they have money. If the system works well for just about anyone, the government becomes happy.
But then, the financial services industry can come to a ruin with how present-day financial crises are showing. It is the job of government regulators to keep track of these market bubbles. The government is also responsible for providing proper financial and securities regulations and measures that will help save the economy and keep it running for long.