What is the Federal Deposit Insurance Corporation and the inherent role of Moral Hazard?
Macroeconomics paper. Please write on what is the Federal Deposit Insurance Corporation and the inherent role of "moral hazard"?
Federal Deposit Insurance Corporation and the Inherited Role of “Moral Hazard”
The banking system is important in the economy of a country. The most critical aspect of the banking system is the presence of public confidence. However, in the United States, Federal Deposit Insurance Corporation (FDIC), is an independent agency established by the national government to promote and preserve the public confidence in the financial structure (Gorton, and Metrick, n.p.). Headquartered in Washington D.C, this agency performs its duty by collecting and managing the deposit insurance fund. This paper, therefore, discusses FDIC and the inherited role of “moral hazard.”
Established in 1933, the Federal Deposit Insurance Corporation (FDIC) was a response to many bank failures that had been witnessed in the years of 1920s and in the wake of 1930s across the nation. Since the FDIC insurance activities on 1st January 1934, there is no depositor reported to have lost their money among the insured funds because of a bank failure. The deposit insurance submitted to the FDIC has also reduced the chances that a bank will run out or fail. However, if not managed well, the deposit insurance could fuel financial system crisis by giving banks undesired incentive to invest in additional risky investments (Salter, Veetil, and White, 156). This case is the inherited role of “...
- Anatomy of a Liquidity Crisis and Recession: Case Study on the Banking Collapse of 2007-8 an. . .Description: Mathematics and Economics: Anatomy of a Liquidity Crisis and Recession: Case Study on the Banking Collapse of 2007-8 and Recession 2007-10...1 page/≈275 words| No Sources | MLA | Mathematics & Economics | Essay |
- Life & DebtDescription: Life & Debt Mathematics and Economics Essay High School level...3 pages/≈825 words| No Sources | MLA | Mathematics & Economics | Essay |
- Analyst for FEMA (Federal Emergency Management Agency) Description: Suppose you are an analyst for FEMA. Would you use the above model with person n replaced by region n and L replaced by disaster and H replaced by no disaster?...8 pages/≈2200 words| 5 Sources | MLA | Mathematics & Economics | Essay |