i) Why are banks susceptible to interest rate risk? What, specifically is the problem that arises, if interest rates increase? What are the regulatory and/or operational measures intended to address this risk?

ii) Why are banks susceptible to liquidity risk? What, is the problem that can arise, if liquidity is insufficient? What are the regulatory and/or operational measures intended to address this risk?

iii) What exactly is looting in the sense discussed in the Akerlof and Romer article? Give a couple of examples. What are some of the factors that raised the incentives for bank manager/owners to loot their own Savings & Loans during the 1980s?