UNIVERSITY OF ZIMBABWE

R095812A

Is the financial and the supervisory, regulatory system in in Zimbabwe still appropriate?

BY

TALENT GOSHO

FINANCE & BANKING STUDENT

AT

UNIVERSITY OF ZIMBABWE

Table Contents

Titles
1.0

Pages

Introduction ................................................................................................................................. 3

1.1Backround ...................................................................................................................................... 4 1.2 Terminology used in the paper ................................................................................................... 7 1.3 Research Objectives ................................................................................................................... 8 1.4 Research Questions.................................................................................................................... 8 1.5 Hypothesis Statement ................................................................................................................ 8 2.0 Literature Review......................................................................................................................... 9

2.1Theoretical Framework ................................................................................................................... 9 2.2 Empirical Literature ..................................................................................................................... 10 3.0 3.1 Methodology ............................................................................................................................. 12 Zimbabwe Financial Regulation Overview .............................................................................. 12

3.1 Role of the RBZ in financial regulation ...................................................................................... 13 3.1.1 Prudential regulation ............................................................................................................ 13 3.1.2 Depositor Protection ............................................................................................................. 13 3.2 Role of the SECZ in financial regulation ........................................................................................ 13 3.3 Role of IPEC in financial regulation ............................................................................................... 14 3.4 The Institutional Approach ........................................................................................................... 14 3.5 Merits and Demerits of the Institutional Approach to Zimbabwe Financial System ....................... 15 3.6 Taxonomy of the Regulatory Frameworks from which Zimbabwe might choose one .................... 16 4.0 Conclusion and Recommendations ............................................................................................ 18

5.0 References ...................................................................................................................................... 19

1.0 Introduction The structure and operation of the financial system have undergone marked changes in the past couple of decades encouraged by dramatic improvements in technology, rapid product innovation, and on-going global financial integration, competition in financial services, and policy, regulatory and trade reforms. These developments have led to a dynamic, and sophisticated global financial services arena and fostered economic growth; at the same time however, problems of confidence and trust have beset the financial system with some severe consequences as demonstrated by the recent crises. Given the on-going questions about the effectiveness and efficiency of financial regulation and its use as a potential instrument for reform, governments have continued to assess and reassess the policy and regulatory framework for the financial system, with a view to ensuring public confidence in the system and its safety and soundness, but also retain its flexibility and innovative character (OECD 2010). Therefore, the purpose of this paper is to evaluate whether the financial and the supervisory, regulatory system in Zimbabwe is still appropriate. An evaluation of all the possible regulatory models to be adopted by the Zimbabwe financial system regulatory authorities shall be done so as to allow for plausible recommendations at the end. This shall precede the analysis of the current financial regulatory framework that is in place in Zimbabwe while analysing pitfalls and the relevance of which.

1.1Backround The structure and operation of the financial system have undergone marked changes in the past couple of decades encouraged by dramatic improvements in technology, rapid product innovation, and on-going global financial integration, competition in financial services, and policy, regulatory and trade reforms. These developments have led to a dynamic, and sophisticated global financial services arena and fostered economic growth; at the same time however, problems of confidence and trust have beset the financial system with some severe consequences as demonstrated by the recent crises. Given the on-going questions about the effectiveness and efficiency of financial regulation and its use as a potential instrument for reform, governments have continued to assess and reassess the policy and regulatory framework for the financial system, with a view to ensuring public confidence in the system and its safety and soundness, but also retain its flexibility and innovative character (OECD 2010). The rapid change in the financial system which was driven by changes in the type of products offered, the complexity of the financial system and a myriad of financial crises has brought with it confusion as to what regulatory framework to follow. This dilemma, however has been exacerbated by an increase it the number of regulatory models that regulatory agencies are expected to adopt. The taxonomy of the regulatory model has ranged from less complicated ones to extremely complicated ones. On the more complicated side, the financial system may be regulated according to the institutions and the functions performed by the firms. Each and every component of the financial system offering different financial products from the other one will have its own regulator. This is like a silo in which like are matched with the like. The less complicated regulatory framework however encompasses the grouping of all the financial institutions under one regulator. The integrated model unifies the whole financial system under the same regulator. The reason for this is advocated to be the growing affinity of the products being offered by the financial institutions whether bank or non-banking institution. Given the pitfalls of the integrated and unified models, some less complicated models have been adopted

notably, the Twin Peak which eliminates the caveats of the integrated model. In this instance, prudential requirements and supervisions and the product offering are governed differently. Whether to choose what model is still a debatable issue in the financial fraternity. The growing globalisation, increase in number of the emerging economies like the BRICS, the financial crisis like the 2007-2009 global financial crisis, and differences in the strength of the financial systems have paved way for asymmetric level of the playing field. Under this backdrop, there is need to synchronise the regulatory framework to match the economic system in which it is situated. This means those different regulatory frameworks are now ubiquitous in different economies. Some have gone for the silo (Institutional) approach (Zimbabwe, China), some for the functional model (France, Italy Spain), some for the integrated approaches (Germany), some have taken the twin peaks (South Africa, Australia, Netherlands), some are still indifferent on what model to adopt (USA, although its believed to be functional and institutional to some extent).Whether this is sustainable or unsustainable; it still remain a hypothesis statement which is subject to validation. A financial system is made up of the banking institutions, the capital markets, and the nonbanking financial institutions like the insurance firms. Anciently, these institutions used to offer different product and there was a sharp dichotomy in the products offered by these institution. However, growing product innovation, and expansion of holding firms mania, one cannot dichotomise the products offered by these institutions. On the part of the stock exchanges, the need for demutualisation has attracted debate across the financial divide raising concern that there is need to shift the operation of the stock exchange into forprofit firm rather than being self-regulatory organisation owned as a club by monopolistic dealers and brokerage firms. The Zimbabwe regulatory framework is a typical of a fragment regulatory mode best describe as the institutional regulatory framework. However for one to write of the regulatory framework as a flaw, he must be strong enough to support himself because other developed countries like the USA and emerging economies like China are using the same siloed regulatory framework successfully. Of course, this author would agree that the silo framework is far behind the back of time given the complexity of the financial system and the growing
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interconnectedness that the financial system is undergoing. Nevertheless, the Zimbabwe Stock Exchange (ZSE) is regulated by the Securities exchange Commission (SECZ); the insurance firms are regulated by the Insurance and Pensions Commission (IPEC) while the banking institutions are under the Reserve bank of Zimbabwe. The benefits and the drawbacks of the silo approach to the Zimbabwes financial system are not subtle and elusive but rather unblemished, agile, and evident .This because no reasonable financial analyst would say the institutional approach is superfluous a regulatory framework in the Zimbabwes financial system, and the same analyst who would be found supporting the instructional framework would be risking an egg on the face given the caveats brought about by the silo approach. This is the reason why the tenacity of this paper is to determine whether the current financial and the supervisory, regulatory system in Zimbabwe are still appropriate. The paper constitutes four sections of which Section One shall be the Introduction, Section Two shall be the Literature Review, the Methodology and Validation of the Hypothesis Statement will be on Section Three, while Conclusion and Recommendations will be on Section Four, the paper shall be closed by the references.

1.2 Terminology used in the paper a. Regulatory Models-These are groups of agencies and a set of measures that are encompassed in in the legislation or government policy of which their primary role is to constrain, mould or control the behaviour of financial institutions operation within a national economy. These may vary from country to country and from economy to economy b. Prudential and Supervisory Methods-These are preventive methods and measures that are aimed at controlling the level of risk taken by banking institutions so as to reduce the risk of financial failure. c. Protective Measures-This is the protection offered to the financial institutions customers or the financial institutions themselves in the event of bank failures and can be applied at a firm or industry base to achieve the goal of safety. d. Institutional or Silo Model-The Institutional or Silos Approach is a legal-entity-driven approach. The firms legal status determines which regulator is tasked with overseeing its activity both from a prudential and business conduct perspective. In other words, this approach follows the boundaries of the financial system in different sectors and each sector is supervised by a different agency. Examples: China, Mexico and Hong Kong e. Integrated Model- under the Integrated or Unified Approach, there is a single universal regulator that conducts both safety and soundness oversight and conductof-business regulation for all the sectors of the financial services business. Example: Germany f. Twin Peak Model- The Twin Peaks Approach is a form of regulation based on objective and refers to a separation of regulatory functions between two regulators: one that performs the safety and soundness supervision function and the other that focuses on conduct-of-business regulation. Examples: Australia and Netherlands g. Functional Model- the Functional Approach is one in which supervisory oversight is determined by the business that is being transacted by the entity, without regard to

its legal status. Each type of business may have its own functional regulator. Examples: France, Italy and Spain 1.3 Research Objectives The main objectives of this paper are: 1) To assess whether the regulatory framework in Zimbabwe is still appropriate 2) To recommend the a suitable regulatory framework for the Zimbabwes financial system 1.4 Research Questions The main questions that this paper is intending to answer are as follows: 1) What is the current regulatory framework in Zimbabwe? 2) How has the current framework achieved its intended objectives? 3) Is there any need for a new regulatory framework that can replace the current one? 4) What is the suitable financial regulatory framework for Zimbabwe? 1.5 Hypothesis Statement The financial regulatory in Zimbabwe is not appropriate since there are better models to be adopted besides the silo approach. Therefore this paper shall test this statement of status quo.

1.0 Literature Review The issue of the appropriateness of a particular regulatory framework to be adopted by the economies is still debatable give the differences in the level of the playing filed. Hoards of theories were put in place in a bid to come up with a common solution as what is the best way of regulating the financial system. Even Zimbabwes financial system is still the doldrums of what mode shall be called the best one. Below is some of the theoretical views visa Vis financial systems regulation both from the empirical perspective and from the theoretical framework. 2.1Theoretical Framework Diamond and Rajan (1983), advocated that the regulation and supervision of banks are the key elements of the financial safety net as banks are usually found at the epicentre of the financial crisis. In this case the writers say the primary justification for financial regulation by authorities is to prevent systemic risk and avoid financial crisis, protect depositors interest and reduce asymmetric information between depositors and banks. Diamond and Rajan views were direct contradictions of the views given by Sinkey (1981), who believed that regulation is counterproductive in achieving goals of efficient allocation of resources. Sinkey (1981) also added that the free market mechanism including self-regulation by experts and professional ethics will always produce an outcome closer to the Pareto optimality. Whether these views by Sinkey were valid Currie (2000) threw in the criticism for the assumptions saying that the theories were developed during pre-regulation and were applied only to tightly controlled functions in the economy. Currie (2000) added that the theory did not consider how unregulated markets can increase systemic risk that can lead to financial crisis like the 2009 global financial crisis. Surely the financial system is ever-changing hence the regulatory framework should be as such cope up with the changes in the systems conditions. Kane (1981) came up with the innovative theory which describe regulation as a dynamic game of actions and responses on which either a regulator or regulatee may make a move at any time. Kane added that regulatees make more moves than regulators. This was later supported by Martin (2000) who describes Baumol (1982) theory of contestable markets as a nexus to the changes in the financial systems conditions and the free entry and exit in the market. All these situations best describe the need for a proper financial regulatory framework. However, the paramount issue is what regulatory framework should be adopted by a particular economy. Fieby (2001) says that it is important to bear in mind that while financial institutions benefit from an appropriate regulatory regime, there is not much evidence that the existence of a regulatory jurisdiction makes institutions stronger and less prone to shocks. This means that there is no unique theoretical model to the regulation and supervision of the financial
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system. The existence of different types of models of the financial systems regulation makes the ideal choice a difficulty exercise. Therefor and ideal structure of financial regulation depends on the structure and development in the financial system Currie (2003) came up with the taxonomy of regulatory models. According to this classification, the regulatory models would be split into protective measures and institutional and functions of the firm. To put it clearly, Llewellyn (2006) came up with the basic issues on institutional structure of financial regulation and supervision. In this case, regulators would choose from four types of models that exist; that are the functional model, the institutional model, the integrated model and the twin peak model. However, literature has it that there is no single mode that is universal to all the financial system. Thus differences in the level of that playing field are a major cause of the differences in the regulatory frameworks adopted by economies. 2.2 Empirical Literature The financial system in Zimbabwe a typical of an institutional regulatory model. Regulatory requirements are applied according to the business conducted by the institutions hence banking institutions have their own regulator, the insurance firms have their own regulator and the capital markets have their own regulator (Mhlanga 2008). The Reserve bank of Zimbabwe according to the Banking Act (Chapter 24:20) is responsible for the regulation of the banking institutions. Section 45(article1) of the Banking Act stipulates the responsibility of the RBZ as to continuously monitoring and supervising banking institutions and associates of banking institutions to ensure that they comply with this Act..Article 2 of the same section stipulates that The Reserve Banks function of monitoring and supervising banking institutions and other companies. The RBZ is however responsible for supervision of the banking institutions whether on the prudential side or on the conduct of business. Section 8 of the banking act stipulates the requirements of the bank when starting up and this being married to the Basel II pillar 1 on bank capital requirements would go a long way in ensuring prudential efficacy. The Insurance and the Pension Commission (IPEC) was formed under the Insurance and Pensions Act (Chapter 24:21).Part IV and section 33 of the IPEC act 24:21 stipulates how the commission regulates insurance firms and pension funds. The Insurance Act (Chapter 24:07) is a major regulatory tool used by IPEC when regulating insurance firms which offers general provisions governing the carrying on of insurance business by registered insurers( Part 4 of the Insurance Act (24:07)). The pension Fund Act 24:09 is also used by IPEC in regulating Pension Funds.

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Now the Zimbabwe Stock Exchange is regulated by the SECZ according to the Securities Act 24:25. Section 100 of Part XII of the Securities act gives the responsibiltyof the SECZ in regulating the ZSE. Before it was repealed the ZSE was governed by the ZSE act chapter 24:18 which was repealed in 2004 since there is now moving towards demutualisation of the ZSE. However, whether the institutional model used in Zimbabwe financial system is adequate, this paper stands to answer that question hence the author is will try to validate whether the silo approach is still applicable in the Zimbabwe financial system.

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2.0 Methodology This section will look at the overview of the Zimbabwes financial regulatory model, its pros and cons. At the end of this section other possible regulatory model are to be evaluated so as to see which model is applicable in the Zimbabwes financial system. 2.1 Zimbabwe Financial Regulation Overview The financial system regulation framework is one of the institutional one. In this case the firms legal status determines which regulator is tasked with overseeing its activity both from a prudential and business conduct perspective. In other words, this approach follows the boundaries of the financial system in different sectors and each sector is supervised by a different agency (Rajendaran 2008). This can clearly be highlighted through the use of the model as below: Figure1: The Zimbabwes Financial System Regulatory Model
The Zimbabwe Financial System

IPEC (IPEC ACT 24:21) Acts Used: Insurance Act (24:07) Pension and Provident Fund Act (24:09)

RBZ (RBZ Act 22:15) Acts used in regulation: Banking Act (24:20) Money Lending and Interest Rates Act (14:14) Asset Management Act (22:26) SECZ (Securities Act 24:25) Acts Used: Securities Act (24:25)

Firm Regulated: Insurance Firms Pension Funds Insurance Brokers Firms Regulated: Banks Asset Management Firms Micro Financial Institutions Firm Regulated: ZSE Brokerage Firms Security Dealers

CSD

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The above model shows the institutional financial regulation framework for the Zimbabwes financial system. 3.1 Role of the RBZ in financial regulation While it is universally agreed that the central bank has a major responsibility for maintaining systemic stability, the definition and legal authority for this is often blurred.(Llewelyn 2006) The above statement is somewhat true in the sense that the RBZ is responsible for too many duties that are inform of monetary policy RBZ act (22:15),bank regulation according to banking act 24:20, regulation of MFI and asset management firms. Below are some of the regulatory roles of the RBZ: 3.1.1 Prudential regulation Section 45 of the Banking Act 24:20 give the RBZ responsibility for the regulation of the financial institutions (banks). In this case the RBZ stipulates the prudential requirements for banks so that risk is reduced in the financial system. The RBZ through the Banking Licensing Supervision and Surveillance is responsible for issuing licenses to banks and also it can cancel the license when necessary for example the Interfin bank and the Royal ban saga. This is done according to section 8 of Part V of the banking act 24:20 which stipulates the requirements of the bank when registering. Section 17 stipulates the requirements for the conduct of the banking business. In this entire instance, the RBZ will be ensuring that systemic risk is averted through ensuring sound operation by banking institutions. 3.1.2 Depositor Protection Section 67 of the banking act stipulates the formation of a Deposit Protection Board that will be responsible for the running of the Deposit Protection Scheme (Part XII) of the banking act. The scheme will be regulated by the RBZ and its main purpose is to fund distressed banks in the event of a crisis. The fund is there to protect the depositors funds so as to avid bank runs and instil confidence in the financial system. The RBZ through it lender of last resort function (section 6 of the RBZ act 22:15) shall also ensure stability in the financial system so as to protect depositors funds. 3.2 Role of the SECZ in financial regulation The SECZ is responsible for the regulation of the ZSE and the participants at the ZSE and these include the security dealers and the security brokers. Firms regulated by SECZ are show on the diagram below: Figure 2: Players at the Securities Exchange
CSD Transfer Secretaries Investment advisors Depository Participants

Securities Markets Players

Asset Managers

13 Custodial Companies

Securities Exchange

The above diagram shows that various firms that are regulated by the SECZ whose responsibility is to ensure the proper functioning of the securities markets through the formulation and implementation of policies 3.3 Role of IPEC in financial regulation The Insurance and Pensions Commission (IPEC), is a body governing the operations of insurance and pensions industry in Zimbabwe. Its vision is to be a highly efficient and effective regulator of the insurance and pensions industry, in view of the significant role it plays in the development of a safe, stable and progressive financial system. IPEC mission is to regulate and supervise insurance companies and pension funds to protect the rights, benefits and other interests of policy holders including pension scheme members so as to inspire public confidence (www.ipec.coz.zw) Major players under IPEC are: Pension funds Insurance companies Brokers Multiple agents Fund Administrators (Other than Life Companies) Loss Assessors

IPEC performs the following functions: Register, regulate and monitor insurance industry players Register, regulate and monitor pension industry players Monitor and ensure compliance of above to set standards as per the relevant Acts. To provide information to the public as well as, encourage and promote investment in insurance, pension and provident funds. To advise the Minister on matters relating to insurance, pensions and provident funds. To perform any other functions permissible in the Act. Extracted from ipec website (www.ipec.cow.zw) The abovementioned is the institutional regulatory model so used in the Zimbabwe financial system. However, it is important to describe the institutional model so that that it becomes understandable as to what it is all about, it merits and demerits especially to the Zimbabwe financial system. 3.4 The Institutional Approach The Institutional Approach is one of the classical forms of financial regulatory oversight.

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It is a legal-entity-driven approach. The firms legal status (for example, an entity registered as a bank, a broker-dealer, or an insurance company) essentially determines which regulator is tasked with overseeing its activity both from a safety and soundness and a business conduct perspective. This legal status also determines the scope of the entitys permissible business activities, although generally there has been a tendency for the regulators to reinterpret and expand the scope of permissible activities, and therefore the scope of activities under their jurisdiction, when requested to do so by the firms. Thus, over time, entities with different legal status have been permitted to engage in the same or comparable activity and be subject to disparate regulation by different regulators. 3.5 Merits and Demerits of the Institutional Approach to Zimbabwe Financial System Below are the advantages and disadvantages of the silo approach to the Zimbabwe Financial System (ZFS) Table 1: Merits and Demerits of the Silo Approach Merits of the silo Approach Demerits of the Silo Approach Above all other considerations, institutional Regulatory overlap and underlap- It is not clear structure may have an impact on the overall who is responsible for the regulation of brokers effectiveness of regulation and supervision that lie both under the IPEC and SECZ. Moreover, because of the expertise, experience and culture asset management firms are under the RBZ that develops within particular regulatory jurisdiction but they also trade at the ZSE hence agencies and the approaches they adopt they have to be regulated by both the SECZ and the RBZ. This will stifle development and stability in the Financial System Closely related to effectiveness is the question Duplication of positions- there is certainly waste of of the clarity of responsibility for particular resources as several boards to lead different aspects or objectives of regulation. This in turn regulatory boards have to be financed; that is , the raises the IPEC , SECZ, and the RBZ boards all needing finance question of inter-agency rivalry and disputes from a cash strapped economy, hey. There is potential for regulatory arbitrage as firm may migrate to the less strict regulatory sections of the financial system from the strict ones. This makes the financial system vulnerable to unscrupulous deals and speculative behaviour causing instabilities. Silo model poses lack of co-ordination between regulatory agencies since each man is for himself and there tend to unnecessary competition between the regulators which causes unnecessary conflicts between them. Consequently there will be lack of transparency amongst the regulators making the whole financial
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system precarious. There is growing product innovation and bank holding firms which left the silo approach superfluous since it does not accommodate similarities in products offered by different institutions in different legal jurisdictions.

3.6 Taxonomy of the Regulatory Frameworks from which Zimbabwe might choose one Below are some of the regulator models are possible of being adopted and that are being ued by different economies worldwide. The merits and demerits of which can be analysed in the tables below:
Table 2: showing the taxonomy of the financial regulation models

Functional Model Description: Under the Functional Approach, supervisory oversight is determined by the business that is being transacted by the entity, without regard to its legal status. Each type of business may have its own functional regulator (Llewelyn 2006).

Integrated(Unified )Model Under the Integrated Approach, there is a single universal regulator that conducts both safety and soundness oversight and conduct-of-business regulation for all the sectors of the financial services business (Llewelyn 2006).

Advantages Specific functions are effectively regulated reducing dangers of overlooking some products.

Advantages Integrated model favour economies of scale since there cost reduction due to having one regulatory agency It is likely that an optimal staff
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Twin Peak Model The Twin Peaks Approach is based on the principle of regulation by objective and refers to a separation of regulatory functions between two regulators: one that performs the safety and soundness supervision function and the other that focuses on conduct-ofbusiness regulation. Under this approach, there is also generally a split between wholesale and retail activity and oversight of retail activity by the conduct-of- business regulator. This is also viewed by some as supervision by objective (Llewelyn 2006). Advantages Encompasses all the advantages of the integrated approach while eliminating its pitfalls. The two agencies have

deployment within a unified agency would be easier to achieve than with a specialist and fragmented institutional structure It is likely to be the case that an optimal staff deployment within a unified agency would be easier to achieve than with a specialist and fragmented institutional structure

Disadvantages Products that are not clearly libelled will be left without a regulator ,for example some credit derivatives There is room for regulatory arbitrage

Disadvantages The model assumes that the financial institutions are now similar in operations which is not really true as there is still some differences that would deny the blanket application of regulation. Firms core business is still as it was below; hence an insurance firm is still offering insurance product which will render the model inappropriate

dedicated objectives and clear mandates to which they are exclusively committed. Accountability is clear because the objectives and mandates of the agencies are clearly defined. Reputation and contamination risks are likely to be lower. If conflicts arise between the two areas, these are more likely to be settled externally and with publicity. There is less concentration of power than in the unified model. There is no danger that one or the other areas of regulation and supervision will come to dominate. It is sometimes alleged that a unified agency might in practice give priority to prudential regulation and supervision Disadvantages There is concentration of power on one regulator. If the regulator makes a mistake, then the whole financial system will be in conundrums paradoxes and enigmas.

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3.0 Conclusion and Recommendations

Therefore, the purpose of this paper was to evaluate whether the financial and the supervisory, regulatory system in Zimbabwe is still appropriate and the hypothesis statement proclaimed that the regulatory framework is superfluous. Now given the above analysis of the institutional model of Table 1, the merits of the model were clearly outweigh by the demerits which is a clear proclamation of the superfluity of the silo model. However in the theoretical literature, Fieby (2001) postulated that it is important to bear in mind that while financial institutions benefit from an appropriate regulatory regime, there is not much evidence that the existence of a regulatory jurisdiction makes institutions stronger and less prone to shocks. This means that there is no unique theoretical model to the regulation and supervision of the financial system. The existence of different types of models of the financial systems regulation makes the ideal choice a difficulty exercise. Therefor and ideal structure of financial regulation depends on the structure and development in the financial system. This author, however is of the view that regulatory model in Zimbabwe is superfluous given the real life performances where there is poor coordination between the regulators themselves, the growth in the integration of the financial products as well as the cost associated with the structure of the model. Therefore, the writer would recommend a twin peak model of financial regulation so as to bring the whole financial system together and cut the cost associated with the institutional model. A single Financial Services Board will be established which will oversee the operation of the prudential and supervision regulators as well as those of the conduct of business. The RBZ will be part of the prudential regulation board and it will now concerned with ensuring financial stability in the economy while performing its LOLR function. This will also give the central bank space to conduct its monetary policy function without any problem. Overall the purpose of this paper was to test if the regulatory framework in Zimbabwe is still appropriate. It was concluded that the framework is disadvantageous and inappropriate hence it was recommended that a twin peak model be adopted o eliminate the caveats of the silo model as well as to ensure a stable financial system and economic growth.

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5.0 References
1. Currie,(2007), Towards General Theory of Financial Regulation, Predicting, Measuring and Preventing Financial Crisis. School of Finance and Economics ,Sydney Australia. 2. Fleckener (2006), Stock Exchanges in Self-regulation Crossroads, Fordham Law Review 3. Kane, (1981),Extracting Non transparent Safety Net Subsidies by Strategically Expanding and Contracting Financial Institutions Balance Sheet, Boston College. 4. Llewelyn ,(2006), Institutional Structure of Financial Regulation and Supervsion-The Basic Issues,Loughborough University. 5. Martin,(2000), Conflicts of Interest in Self-Regulation. Can Demutualised Exchanges Manage them,World Bnk wp. 6. OECD,(2010),Policy Framework for Effective and Efficient Regulation. General guidance and High-level Checklist, Guan 7. Banking Act 24:20 8. RBZ Act 22:15 9. IPEC Act 24:21 10. Insurance Act 24:07 11. Pensions and Provident Fund Act 24:09 12. Securities Act 24:25 13. Moneylending and Rates of Interest Act [Chapter 14:14] 14. Asset Management Act 24:26

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