A con artist has a great idea: hell open a bank without investing any capital and lend
Question:
A con artist has a great idea: he’ll open a bank without investing any capital and lend all the deposits at high interest rates to real estate developers. If the real estate market booms, the loans will be repaid and he’ll make high profits. If the real estate market goes bust, the loans won’t be repaid and the bank will fail—but he will not lose any of his own wealth. How would modern bank regulation frustrate his scheme?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Related Book For
Essentials Of Economics
ISBN: 9781429278508
3rd Edition
Authors: Paul Krugman, Robin Wells, Kathryn Graddy
Question Posted: