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CASE STUDY Bank Financing to Drop With Tougher Rules, Poloz Says Greg Quinn Bloomberg News December 11, 2014 Global banks will reduce the financing they offer to companies as tougher regulations take hold, which may slow economic growth if new competitors don't emerge, Bank of Canada Governor Stephen Poloz said. New rules are "absolutely essential" to prevent another crisis like the one that began in 2008, Poloz said in a speech to the Economic Club of New York. The rules have led global banks to sell $700 billion of assets and operations since 2007, implying that "gaps" in financing will appear, he said. "These areas of retreat by banks could look like good opportunities for other financial intermediaries," Poloz said. "But it would be surprising if the net effect were not to reduce the availability of credit." New and small businesses are most likely to suffer from reduced credit, along with trade finance and infrastructure projects, Poloz said. Innovation may help offset the impact, with new funding coming from increased corporate bond sales, securitization markets and public-private partnerships, Poloz said. Regulators must also ensure new rules don't stifle financial innovation, Poloz said, adding "Thankfully, the balance between regulation and innovation is dynamic, not static-competitive forces ensure this 1- 2- Analyse the importance of the role of regulators in the banking sector. (2 marks) Assess the relationship between regulations and crisis. (2 marks) give some example of Regulators' behaviour in time of crisis. (2 marks)

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