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Why do bank runs occur
a. Asymmetric Information
b. Moral Hazard
c. Financial dis-imediation
d. Capital Requirements
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- Bank runs are often described as self-fulfilling prophecies. Why is this phrase appropriate to bank runs?What is the asset-liability time mismatch that all banks face?Should banks that have become “too big to fail” (meaning their collapsewould significantly damage the economy) be subject to stricter regulationsthan smaller banks? Why or why not?
- Write an article of 600- 1000 words on Great Recession of 2008- Explain how moral hazard and adverse selection in the financial system led to the collapse of the financial system in Iceland? Give typing answer with explanation and conclusionHey (Depository Institutions ) Explain why a bank typically holds as reserves only a fraction of its deposit liabilities? In light of this arrangement, why is it important that depositors have confidence in their bank's health?N3 Due to the Financial crisis back in 2008-09, many or our largest investments firms like Morgan Stanley and Goldman Sachs became banks. why would they do that?
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- Banks are financial intermediaries engaged in maturity transformation. Explain what it means for banks to engage in maturity transformation and what are the risks associated with it for banks and depositors. How do banks make profits?If bad credit risks are the ones who most actively seek loans, then financial intermediaries face (a) a moral hazard problem. (b) an adverse selection problem. (c) a free-riding problem. (d) no problem at all.The government safety net creates ________ problem because risk -loving entrepreneurs might find banking an attractive industry. A) an adverse selection B) a moral hazard C) a lemons D) a revenue
