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How does the concept of asymmetric information help
to define a financial crisis?
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- Summarize the government policies thatreduce the likelihoodof financial crisesin emerging marketcountries.How can the existence of asymmetric information providea rationale for government regulation of financial markets?In what way might consumer protection regulationsnegatively affect a financial intermediary’s profits?Can you think of a positive effect of such regulationson profits?
- What are the interlinkages between financial crisis and financial system of acountry? Explain elaborately, no plagiarism.“The more collateral there is backing a loan, the lessthe lender has to worry about adverse selection.” Isthis statement true, false, or uncertain? Explain youranswerWhat are the transaction costs problems facing financialorganizations? Explain how financial intermediaries canhelp reduce these problems.
- What are the legislation and regulatory changes thathave driven the changes in the services of the financialinstitutions?How does a general increase in uncertainty as a resultof the failure of a major financial institution lead to anincrease in adverse selection and moral hazard problemWhy do equity holders care more about ROE thanabout ROA?
- Would you recommend the adoption of a system ofdeposit insurance, like the FDIC in the United States, ina country with weak institutions, prevalent corruption,and ineffective regulation of the financial sector?2. What are the main reasons for the increased total market cap for the cryptocurrencies during Pandemics? What do you expect for these markets when we wee see normalization in the economic conditions?In 2008, as a financial crisis began to unfold in theUnited States, the FDIC raised the limit on insuredlosses to bank depositors from $100,000 per account to$250,000 per account. How would this help stabilizethe financial system?