The Role of Banking Legislation in Making and Receiving Bad Loans through the Analysis of Receiving Bad Loans Regulations in Banks and Financial Institutions

Banking legislation is indeed a tool to achieve the goal of legislation in the government in which it leads the money market towards its own targets. The case of government’s intervention in the economy and its amount in the money market has been analyzed and reviewed here and there. However, how much of this intervention leads to bad loans is a matter to discuss. Bad loans as a fundamental problem have made trouble to the banking system. Since the government itself is a macro debtor to the banking system, this legislation designed by the government is of the intrinsic defect. In this legislation, there is the case of encouraging and punishing aspect to paying the bad debts;  nevertheless, the amount of credit should be considered. Therefore, this banking legislation style in making or receiving bad loans has serious defects.