Q. Show Social and Regulatory Factors?
Regulatory climate and legislation against the environmental degradation may impair the profitability of the industry. Price control, volume control, import/export control and environment control reduce the profitability of the firm. This risk is more in industries related to public utility sectors such as telecom, banking and transportation. The governments' tariff policy of the telecom sector has a direct bearing on its earnings. Likewise, the interest rates and the directions given in the lending policies affect the profitability of the banks.