The Role of Supervisory and Regulatory Institutions in Preventing the Bankruptcy of Banks and Insurance Companies (a Comparative Study in American and Iranian Law)

Document Type : Scientific Research

Authors

Assistant Professor of Private Law, Faculty of Human Sciences, Damghan University, Damghan, Iran.

Abstract

Banks and insurance companies play a key role in the economy. These institutions have distinctive characteristics from other commercial institutions, which makes the harmful effects of their bankruptcy more felt for the country's economy than other companies. For this reason, legislators have often tried to prevent their bankruptcy in every possible way and in order to achieve this goal, they have provided regulators and supervisors for these institutions. All the efforts of the regulators and supervisors are to make sure that the institution that wants to operate as a bank or insurance company has the competence and if he is qualified, they will grant him an establishment license, which is called supervision at the issuing stage. After issuing the license, regulators and supervisors try to prevent the financial weakness and eventual bankruptcy of the institutions under their regulation and supervision in various ways. These methods are different depending on the governing laws. In our country the Central Bank and the Central Insurance are the only regulatory and supervisory institutions for banks and insurance companies. The American banking system is a dual system including federal and state banks, and the task of regulation is not limited to a specific institution. Also, regulation of insurance companies and their supervision has been left to the states, and the supervision system governing the companies of this country does not have integrity and unity. In this article, we examined the regulatory and supervisory institutions in the American and Iranian legal systems.

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References

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