Financial segregation

Date and country of first publication

2003
Hong Kong

Definition

Financial segregation refers to the practice of separating financial activities or institutions based on certain characteristics or criteria. It can occur at various levels, including within companies, industries, or even national economies.

Within companies, financial segregation may involve the separation of different business lines or departments based on their financial activities. For example, a bank may segregate its retail banking operations from its investment banking activities to manage risk and comply with regulatory requirements.

At the industry level, financial segregation can refer to the separation of different sectors within the economy. For instance, some countries may have strict regulations that prevent banks from engaging in certain types of financial activities, such as the separation between commercial and investment banks in the United States under the Glass-Steagall Act.

Financial segregation can also occur at the national level, with governments enforcing policies to separate domestic financial systems from international ones. This may involve imposing capital controls, restricting cross-border financial transactions, or establishing separate currencies or exchange rate regimes.

The aim of financial segregation can vary depending on the context. It may be intended to promote financial stability, protect consumers, prevent conflicts of interest, ensure fair competition, or simplify regulation and supervision. However, critics argue that excessive financial segregation can limit efficiency, inhibit innovation, and impede economic growth.

Overall, financial segregation is a complex and multifaceted concept that involves the separation of financial activities based on certain criteria, and its implications can vary depending on the specific context and objectives.

Notes

At its current state, this definition has been generated by a Large Language Model (LLM) so far without review by an independent researcher or a member of the curating team of segregation experts that keep the Segregation Wiki online. While we strive for accuracy, we cannot guarantee its reliability, completeness and timeliness. Please use this content with caution and verify information as needed. Also, feel free to improve on the definition as you see fit, including the use of references and other informational resources. We value your input in enhancing the quality and accuracy of the definitions of segregation forms collectively offered in the Segregation Wiki ©.

Further reading

Wu R. (2003) "Segregation and convergence: The Chinese dilemma for financial services sectors", China and the World Trading System: Entering the New Millennium, 283-298. Cambridge University Press. DOI: 10.1017/CBO9780511494482.018

Săgeată R. (2020) "Commercial services and urban space reconversion in Romania (1990 2017); [Trgovske storitve in ponovna preobrazba mestnega prostora v Romuniji (1990 2017)]", Acta Geographica Slovenica, 60(1), pp. 49-60. ZRC SAZU, Zalozba ZRC. DOI: 10.3986/AGS.6995