Most US banks are privately owned, profit-making organizations. Although they provide a service just as many other businesses, banks differ because of their importance in the macroeconomy. Policymakers have debated whether banks should be permitted only do to banking business, or whether banks should be permitted to engage in other lines of business such as selling insurance or buying and selling stocks and bonds. What are the risks for the macroeconomy if a bank fails that do not exist for other businesses? If banks could participate in other lines of business what benefits would there be for consumers? Overall, should banks be allowed to enter other lines of business?
Most US banks are privately owned, profit-making organizations. Although they provide a service just as many other businesses, banks differ because of their importance in the macroeconomy. Policymakers have debated whether banks should be permitted only do to banking business, or whether banks should be permitted to engage in other lines of business such as selling insurance or buying and selling stocks and bonds. What are the risks for the macroeconomy if a bank fails that do not exist for other businesses? If banks could participate in other lines of business what benefits would there be for consumers? Overall, should banks be allowed to enter other lines of business?
Economics: Private and Public Choice (MindTap Course List)
16th Edition
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Chapter15: Macroeconomic Policy, Economic Stability, And The Federal Debt
Section: Chapter Questions
Problem 11CQ
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Most US banks are privately owned, profit-making organizations. Although they provide a service just as many other businesses, banks differ because of their importance in the macroeconomy. Policymakers have debated whether banks should be permitted only do to banking business, or whether banks should be permitted to engage in other lines of business such as selling insurance or buying and selling stocks and bonds. What are the risks for the macroeconomy if a bank fails that do not exist for other businesses? If banks could participate in other lines of business what benefits would there be for consumers? Overall, should banks be allowed to enter other lines of business?
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