Financial regulators have a difficult time managing international and local banks in time of financial crisis. What are the main issues faced for both type of institutions, and what are possible...

Financial Crisis
Financial Regulator is a body or an official that monitors the financial behaviour of
companies and levels of race or competition in particular finance market. Financial regulators are
supposed to follow the financial regulations which are in the nature of restrictions, guidelines
and are prescribed by the finance authority. The main aim of these regulations is to maintain
integrity in financial system, consumer protection, market confidence, reduction of financial
crime and financial stability. The financial and banking sectors are crucial elements of an
economy.
Financial Crisis is a situation in which a part of the nominal value of financial asset is lost. It
is associated with banking panics, stock market crashes, sovereign defaults and currency crisis. It
straight away results into loss of paper wealth but does not result into the change in real economy
i.e. real economy remains stable with no change in case of financial crisis.
Bank run or banking crisis is mainly due to the sudden withdrawals by the depositors. Bank
generally lends most of the cash they received from the depositors with deposit rate lower than
lending rate. Sometimes depositors all of sudden demands their cash, which banks has given it
to others, so in that case banks faces difficulty to pay back the deposits which results into bank
insolvency causing customers or depositors to lose their deposits only to the extent which is not
covered by deposit insurance. (Lawson, T. 2009).
Banks crisis is combination of two; financial crisis (due to financial risk) and system
crisis (due to systematic risk). In financial crisis banks suffer cascading failure whereas in system
crisis all the banking capital in a country is wiped out.
Currency crisis, another name balance of payment crisis is a sudden devaluation in the
currency. Fixed exchange rate is affected because of the currency crisis.
Economy bubble is a kind of crisis which arises because of trading in high volumes at a
price which is at inconsistency with intrinsic values. With full reserve banking, Interest rates will
be set by markets rather than by Monetary Policy committee. (Morgan, J. 2009).
Stock market crash is a decline in stock prices...