Too big to fail institutions from "summary" of Too Big to Fail by Andrew Ross Sorkin
The concept of institutions that are deemed "too big to fail" is a controversial one that has sparked heated debates among policymakers, economists, and the public. These institutions are considered so vital to the functioning of the economy that their failure would have catastrophic consequences for the financial system as a whole. Therefore, they are seen as deserving of special treatment and protection from the government in times of crisis. The idea behind designating certain institutions as "too big to fail" is based on the belief that their failure would trigger a domino effect that could bring down the entire financial system. This belief is rooted in the interconnectedness of the modern financial system, where the failure of one institution can have far-reaching repercussions on other institutions and markets. Critics of the "too big to fail" concept argue that it creates a moral hazard by incentivizing risky behavior among these institutions, safe in the knowledge that the government will step in to bail them...Similar Posts
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