These regulations, while intended to stabilize the financial system, did have some negative impacts on that very system. Small banks have especially suffered as their compliance costs have gone up exponentially. In a WSJ article, Dodd-Frank’s Effect on Small Businesses is Muted, author Kate Davidson speaks about the impact of Dodd-Frank on small banks. Davidson cites a Harvard Case Study conducted in Feb 2014, which found that small banks lost 6% of their share of the industry assets throughout the financial crisis. That loss has since increased to 12% with the passing of the Dodd-Frank Act. (Davidson, WSJ). This further bolsters the claim that Dodd-Frank negatively impacted small banks. Davidson would go on to state that small banks have been unable to meet financing needs of small businesses, which then hurts small business growth (Davidson, WSJ). The number of banks that offered free checking dropped from 75% to 39% after the implementation of Dodd-Frank. Specifically this decrease in free checking was attributed to the Durbin amendment, which limited the fees, associated with debit card processing. This amendment initially seems like a positive for consumers, but will actually leads to increases in banking fees which pushes low income consumers away (Hensnarling, WSJ). Basel III has created global issues for banks within emerging market economies or EME Banks. Reforms like Basel III took place in order to fix what was occurring within large institutions in advanced economies (Sinah, 65). These economies are in different growth stages that advanced economies thus the regulations can have a crippling effect on the growth. Emerging markets are experiencing greater growth which means greater credit requirements and a greater amount of capital requirements (Sinah, 65). EME’s should not be slowed down by advanced economy
These regulations, while intended to stabilize the financial system, did have some negative impacts on that very system. Small banks have especially suffered as their compliance costs have gone up exponentially. In a WSJ article, Dodd-Frank’s Effect on Small Businesses is Muted, author Kate Davidson speaks about the impact of Dodd-Frank on small banks. Davidson cites a Harvard Case Study conducted in Feb 2014, which found that small banks lost 6% of their share of the industry assets throughout the financial crisis. That loss has since increased to 12% with the passing of the Dodd-Frank Act. (Davidson, WSJ). This further bolsters the claim that Dodd-Frank negatively impacted small banks. Davidson would go on to state that small banks have been unable to meet financing needs of small businesses, which then hurts small business growth (Davidson, WSJ). The number of banks that offered free checking dropped from 75% to 39% after the implementation of Dodd-Frank. Specifically this decrease in free checking was attributed to the Durbin amendment, which limited the fees, associated with debit card processing. This amendment initially seems like a positive for consumers, but will actually leads to increases in banking fees which pushes low income consumers away (Hensnarling, WSJ). Basel III has created global issues for banks within emerging market economies or EME Banks. Reforms like Basel III took place in order to fix what was occurring within large institutions in advanced economies (Sinah, 65). These economies are in different growth stages that advanced economies thus the regulations can have a crippling effect on the growth. Emerging markets are experiencing greater growth which means greater credit requirements and a greater amount of capital requirements (Sinah, 65). EME’s should not be slowed down by advanced economy