Prudential regulation is a framework of rules and supervisory practices applied to financial institutions. Its primary objective is to ensure the safety and soundness of individual firms and the stability of the financial system as a whole. As an academic concept, it investigates the design, implementation, and effectiveness of these measures, including the study of capital adequacy requirements, liquidity standards, risk management frameworks, corporate governance, and resolution mechanisms. Key characteristics involve a focus on firm-level solvency and liquidity (micro-prudential) alongside measures to mitigate systemic risk across the financial system (macro-prudential). Its significance lies in preventing financial crises, protecting depositors and policyholders, and maintaining confidence in the financial system, thereby supporting broader economic stability.