Understanding Interest Theory For Law And Economics

Assumptions in Interest Theory

Discuss about the Interest Theory for Law and Economics.

Interest theory was first developed under the direction of Arthur Cecil Pigou. It holds the principal that any regulation is provided in total response received from the public as a demand. The demand intends to correct the wrong inequitable market practices. Some of the critical assumptions in the theory are that markets are considered to be pretty fragile and if they are left alone they operate in a very inefficient manner. The government in all such cases is just considered to be a natural arbiter. The interest theory assumes the fact that the markets are overall very fragile. They tend to operate in favour of individuals concern and ignores the overall society in the process at times. Thus in such conditions it is very important that from time to time economic markets and accounting world needs government regulations. This is where the role of regulators or in this case politicians become very important. The government or the regulators the sectors from time to time to keep them from inefficiency. Markets are considered to be very fragile if they are left open to any kind of investors. This is the prime reason why it is very important that government and regulations keep visiting the market from time to time so that they can ensure that all proper interests in the markets are taken care off so that the market can develop from a nascent stage to a developed market. The interest theory assumes the fact that the markets are overall very fragile (Hantke-Domas, 2013). They tend to operate in favour of individuals concern and ignores the overall society in the process at times. Thus in such conditions it is very important that from time to time economic markets and accounting world needs government regulations. This is where the role of regulators or in this case politicians become very important. The government or the regulators the sectors from time to time to keep them from inefficiency (Mizutani, 2015). Markets are considered to be very fragile if they are left open to any kind of investors. This is the prime reason why it is very important that government and regulations keep visiting the market from time to time so that they can ensure that all proper interests in the markets are taken care off so that the market can develop from a nascent stage to a developed market. It holds the principal that any regulation is provided in total response received from the public as a demand. The demand intends to correct the wrong inequitable market practices. It is very important that politicians and bureaucrats make their investors aware about interest theory. In the current scenario, investors will have lots of questions and these queries need to be solved on priority basis. This should be considered as an opportunity to gain customers’ trust and provides politicians and bureaucrats a good opening to get into some kind of politicians and bureaucrats engagement. It will help in building strong business relationships with policy makers. As the saying says ‘the best customer in any business is the informed customer’. The informed customer understands the situation, trusts the advisor, and stays with the community longer. This is why creating informed customers in the interest theory industry can go a long way in paving the way for future growth of the industry. As per Deloitte, the modern day mobile customer engagement model comprises creating awareness; leading to adoption; enhancing user experience, and finally customer engagement. The priority of the politicians and bureaucrats should always be to strengthen the relationship with the customer. This is when staying in constant touch with policy makers becomes very important. For interest theory, politicians and bureaucrats can create simple FAQs covering all critical information that can go a long way in solving politicians and bureaucrat’s queries.

Role of Politicians and Regulators in Economic Markets

Interest theory helps in understanding the behaviour of policy makers in the business. The policy makers or the regulators at times tends to work on the business prospects. It holds the principal that any regulation is provided in total response received from the public as a demand. The demand intends to correct the wrong inequitable market practices. Some of the critical assumptions in the theory are that markets are considered to be pretty fragile and if they are left alone they operate in a very inefficient manner. The government in all such cases is just considered to be a natural arbiter. The interest theory assumes the fact that the markets are overall very fragile. They tend to operate in favour of individuals concern and ignores the overall society in the process at times. Thus in such conditions it is very important that from time to time economic markets and accounting world needs government regulations. This is where the role of regulators or in this case politicians become very important. The government or the regulators the sectors from time to time to keep them from inefficiency. Markets are considered to be very fragile if they are left open to any kind of investors (Hantke-Domas, 2013). This is the prime reason why it is very important that government and regulations keep visiting the market from time to time so that they can ensure that all proper interests in the markets are taken care off so that the market can develop from a nascent stage to a developed market. It holds the principal that any regulation is provided in total response received from the public as a demand. The demand intends to correct the wrong inequitable market practices. It is very important that politicians and bureaucrats make their investors aware about interest theory. In the current scenario, investors will have lots of questions and these queries need to be solved on priority basis. This should be considered as an opportunity to gain customers’ trust and provides politicians and bureaucrats a good opening to get into some kind of politicians and bureaucrats engagement. It will help in building strong business relationships with policy makers. As the saying says ‘the best customer in any business is the informed customer’. The informed customer understands the situation, trusts the advisor, and stays with the community longer. This is why creating informed customers in the interest theory industry can go a long way in paving the way for future growth of the industry. As per Deloitte, the modern day mobile customer engagement model comprises creating awareness; leading to adoption; enhancing user experience, and finally customer engagement.

Benefits of Interest Theory for Investors and Politicians

Some of the critical assumptions in the theory are that markets are considered to be pretty fragile and if they are left alone they operate in a very inefficient manner. The government in all such cases is just considered to be a natural arbiter. The interest theory assumes the fact that the markets are overall very fragile. They tend to operate in favour of individuals concern and ignores the overall society in the process at times. Thus in such conditions it is very important that from time to time economic markets and accounting world needs government regulations. This is where the role of regulators or in this case politicians become very important. The government or the regulators the sectors from time to time to keep them from inefficiency. Markets are considered to be very fragile if they are left open to any kind of investors. This is the prime reason why it is very important that government and regulations keep visiting the market from time to time so that they can ensure that all proper interests in the markets are taken care off so that the market can develop from a nascent stage to a developed market. The priority of the politicians and bureaucrats should always be to strengthen the relationship with the customer. This is when staying in constant touch with policy makers becomes very important. For interest theory, politicians and bureaucrats can create simple FAQs covering all critical information that can go a long way in solving politicians and bureaucrat’s queries.

Some of the possible ways in which they can help investors and also grow their business are:

• Strengthening relationship with politicians and bureaucrats: The priority of the politicians and bureaucrats should always be to strengthen the relationship with the customer. This is when staying in constant touch with policy makers becomes very important. For interest theory, politicians and bureaucrats can create simple FAQs covering all critical information that can go a long way in solving politicians and bureaucrat’s queries.
• Channelising savings to investment: The government's interest theory move has left all kinds of savers confused, but people with swelling savings accounts can make intelligent use of money by investing. It will help them earn better returns than what a savings bank account offers. The distribution community should educate investors about the opportunities that interest theory investments offer. Politicians and bureaucrats can educate investors on the merits of investing in politics & governance across different categories which help moving the surplus cash from the almirah and bank accounts to politics & governance.
• Communicate to investors about benefits of staying invested: Politicians and bureaucrats should communicate to the investor that shocks and corrections in any market are inevitable. Today it is interest theory, tomorrow it will be U.S. Fed rate hike and day after it will be something else. If one’s investments are in line with one’s goals then investors should not be worried about short-term impacts of events on markets (Hantke-Domas, 2013).
• Learn yourself and educate policy makers: In the current environment, it is important that the politicians and bureaucrats is on a continuous learning curve. Politicians and bureaucrats need to keep themselves updated to answer politicians and bureacrats queries of all kinds. This becomes even more critical when the politicians and bureaucrats is dealing with the HNI segment. HNIs are fairly evolved when it comes to investments and hence equal if not greater level of involvement needs to be shown by the politicians and bureaucrats.

Conclusion

The wave of interest theory has led to a lot of confusion among current and future customers of the industry. Distribution community should take this up as an opportunity to touch base with both the sets of customers. Clearing confusion of current customers about interest theory or any other related issue will help in enhancing business and in creating superior customer experience. Reaching out to potential customers by educating them about interest theory products as viable options of parking surplus cash can help in generation of new business. It is very important that the distribution community sees the present phase as an opportunity for future growth of the industry. Some of the critical assumptions in the theory are that markets are considered to be pretty fragile and if they are left alone they operate in a very inefficient manner. The government in all such cases is just considered to be a natural arbiter. The interest theory assumes the fact that the markets are overall very fragile. They tend to operate in favour of individuals concern and ignores the overall society in the process at times. Thus in such conditions it is very important that from time to time economic markets and accounting world needs government regulations. This is where the role of regulators or in this case politicians become very important. The government or the regulators the sectors from time to time to keep them from inefficiency. Markets are considered to be very fragile if they are left open to any kind of investors. This is the prime reason why it is very important that government and regulations keep visiting the market from time to time so that they can ensure that all proper interests in the markets are taken care off so that the market can develop from a nascent stage to a developed market. The priority of the politicians and bureaucrats should always be to strengthen the relationship with the customer. This is when staying in constant touch with policy makers becomes very important. For interest theory, politicians and bureaucrats can create simple FAQs covering all critical information that can go a long way in solving politicians and bureaucrat’s queries.

References:

Hantke-Domas, M. (2003). The public interest theory of regulation: non-existence or misinterpretation?. European journal of law and economics, 15(2), 165-194.

Schubert, G. A. (1960). The public interest: A critique of the theory of a political concept. Free Press of Glencoe

Mizutani, F., & Nakamura, E. (2015). To What Extent Do Public Interest and Private Interest Affect Regulations? An Empirical Investigation of Firms in Japan Through an empirical analysis of firms in Japan, this paper investigates to what extent the public interest and the private interest theories, respectively, explain the actual regulatory process. Our estimation findings are as follows. First, the explanatory power of the public interest theory is higher in non-public utility industries, while that of the private interest theory is ... (No. 2015-21). Kobe University, Graduate School of Business Administration

Sanday, P. R. (Ed.). (2014). Anthropology and the public interest: Fieldwork and theory. Academic Press

Baudot, L., Roberts, R. W., & Wallace, D. M. (2015). An examination of the US public accounting profession’s public interest discourse and actions in federal policy making. Journal of Business Ethics, 1-18

van Witteloostuijn, A., Esteve, M., & Boyne, G. (2016). Public Sector Motivation ad fonts: Personality Traits as Antecedents of the Motivation to Serve the Public Interest. Journal of Public Administration Research and Theory, muw027