Bank regulations are a form of government regulation which subject banks to certain requirements, restrictions and guidelines. This regulatory structure creates transparency between banking institutions and the individuals and corporations with whom they conduct business.
(a) The theory of public interest and the capture theory are two important theories concerning regulation. Compare and contrast these two theories.
(b) Big banks should be broken up into smaller entities to avoid government bailouts in case they run into difficulty. Do you agree with this statement? Justify your stance.