1lecture13

1lecture13 -...

Info iconThis preview shows page 1. Sign up to view the full content.

View Full Document Right Arrow Icon
Open Yale Courses ECON 252: Financial Markets Lecture 13 - Banking: Successes and Failures << previous session | next session >> Overview: Banks, which were first created in primitive form by goldsmiths hundreds of years ago, have evolved into central economic institutions that manage the allocation of resources, channel information about productive activities, and offer the public convenient investment vehicles. Although there are several types of banking institutions, including credit unions and Saving and Loan Associations, commercial banks are the largest and most important in the banking system. Banks are designed to address three significant problems in capital markets: adverse selection, moral hazard, and liquidity. Banks make money by borrowing long and lending short and use fractional reserves to lend more funds than are deposited. History has seen numerous problems
Background image of page 1
This is the end of the preview. Sign up to access the rest of the document.
Ask a homework question - tutors are online