Question: 1. Explain why a person starting up a small business probably stands a better chance of raising money by applying for a bank loan than by issuing bonds.
2. Banks now control only about half as much of the total financial intermediary assets as they did about 40 years ago. What are some of the driving forces behind that decline, and where has that money gone?
3. Suppose that you are running a bank and your depositors' accounts are insured up to $250,000 by the federal government. What moral-hazard problems might arise?