Topic summary
Financial firm
Extracted from the Wikipedia article Financial institution.
Regulation
Financial institutions in most countries operate in a heavily regulated environment because they are critical parts of countries' economies, due to economies' dependence on them to grow the money supply via fractional-reserve banking. A lesson of the 2007–2008 financial crisis was that pre-crisis capital requirements had not accounted for the systemic impact of stress at individual institutions, prompting calls for closer supervision of large, interconnected financial firms. Regulatory structures differ in each country, but typically involve prudential regulation as well as consumer protection and market stability. Some countries have one consolidated agency that regulates all financial institutions while others have separate agencies for different types of institutions such as banks, insurance companies and brokers.