Morris, Charles; Hoenig, Thomas - Volkswirtschaftliche Fakultät, … - 2011
, liquidity, and credit intermediation services. But banks also are inherently unstable because depositors will “run” if they … believe their bank is in financial trouble. • While the safety net solves the instability problem, it also creates incentives … discipline creates incentives for banks to make riskier investments and increase leverage. The subsidy and associated incentive …