THE UNITED REPUBLIC OF TANZANIA
MINISTRY OF EDUCATION, SCIENCE AND
TECHNOLOGY
MZUMBE UNIVERSITY
(CHUO KIKUU MZUMBE)
SCHOOL OF BUSINESS
15% TEST: 22 June, 2022
Course Code:
FIN 5213
Course Name:
FINANCIAL INSTITUTIONS
Programme:
MSc A&F
Date:
22/06/2022
Time:
1700 – 2000 HRS
INSTRUCTIONS
1. There are TWO (2) questions in this examination.
2. Answer ALL questions
3. All questions carry equal marks.
QUESTION ONE (10 MARKS)
The main purpose of financial regulation is to make more information available
for market participants, and hence protect investors from adverse selection,
reduce the asymmetry of information, and ensure the soundness of financial
intermediaries. To protect the public and the economy from financial panics, the
government of the United Republic of Tanzania implement six types of
regulations: restrictions on the entry of financial intermediaries, stringent
reporting requirements for financial intermediaries, restrictions on assets and
activities of financial intermediaries, insurance of people’s deposits by the
government if the financial intermediary should fail, limitations on competition
among financial intermediaries, and restrictions on interest rates that can be
paid on deposits by financial intermediaries. Yet, these financial intermediaries
play a crucial role in an economic crisis–they are responsible for both causing
the market to crash and then helping it recover from the crisis.
Required:
Discuss how economic crises manifest at the level of financial intermediaries.
QUESTION ONE (05 MARKS)
Many countries have a very similar set-up of central banks' responsibilities such
as Financial Market Stability, Monetary Policy and issuing currency. The central
authority of the Tanzania money and banking system is the Board of Directors
of the Bank of Tanzania.
Required:
Critically describe the purpose and membership of the Board of Directors of the
Bank of Tanzania.