The financial law relates to the policies and regulations governing business transactions within the global economy. Essentially, the financial law encompasses regulations on finance and finances concerning the processes of raising capital or providing funds to individuals or entities. Similarly, the financial law focuses on focuses on legal aspects concerning corporate companies, capital markets, and international trade. When it comes to Corporate Finance, it looks into equity and debt financing components of a company. Financial regulations enable investors to keep corporate companies expenditure in check by ensuring the firms operations are as per the preset guidelines. On the aspects of international trade, it focuses on the instruments that organizations use to facilitate imports and exports. Financial law involves a broad legal framework for investors, lenders, borrowers, financial intermediaries, security markets and exchanges. The financial system has several institutions that include organizations such as commercial banks, the central bank, credit card companies, investment funds, insurance firms, stock brokerage firms, imports and exports, accounting and government infrastructure for clearing and settlement.Banks are the channels through which hard currency enter the market so as to facilitate trade.
They ensure provision payments and capital to individuals under central banks regulations. Governments in most economies are the main regulator of the financial systems. For instance, they set interest rate caps for the lending institutions and come up with monetary policies to protect their individual currencies against negative impact resulting from exchange rate fluctuations. Governments through their specific revenue collection agents set the income tax percentages charged on individual’s or a company’s annual income. Additionally the government sets the amount of capital tax on capital gains made by organizations or individuals trading in the financial markets. Furthermore to correct a trade imbalance a government may decide to increase its customs duty charges on imports.
Markets rely on regulations to ensure financial transactions occur within an enforceable legal framework. Other than the provision of physical facilities markets require the assurance that parties will fulfill their obligations. Finally, the financial law provides a sound legal system that guarantees order and security in enforcing contracts among individuals.