{"id":210807,"date":"2022-10-17T20:16:31","date_gmt":"2022-10-17T14:46:31","guid":{"rendered":"https:\/\/blog.forumias.com\/?p=210807"},"modified":"2022-10-17T20:16:31","modified_gmt":"2022-10-17T14:46:31","slug":"the-bigger-picture-of-intermediation-financial-crises","status":"publish","type":"post","link":"https:\/\/forumias.com\/blog\/the-bigger-picture-of-intermediation-financial-crises\/","title":{"rendered":"The bigger picture of intermediation, financial crises"},"content":{"rendered":"\n<p><strong>Source<\/strong>: The post is based on an article\u00a0<strong>\u201c<\/strong><strong>The bigger picture of intermediation, financial crises\u201d <\/strong>published in\u00a0<strong>The Hindu<\/strong>\u00a0on\u00a0<strong>17<sup>th<\/sup> October 2022<\/strong>.<\/p>\n<p><strong>Syllabus: GS 3 \u2013 <\/strong><strong>Economic Development<\/strong><\/p>\n<p><strong>Relevance:\u00a0<\/strong><strong>findings of the Nobel Prize winner in economics<\/strong><\/p>\n<p><strong>News: <\/strong><strong>\u00a0<\/strong>This article highlights the role played by financial sector and banks in particular, in the development of modern economies.<\/p>\n<p>Nobel Prize 2022 in economics has been awarded to Ben S. Bernanke, Douglas W. Diamond and Philip H. Dybvig for research on banks and financial crises.<\/p>\n<p><strong>What are the findings behind the Nobel prize in Economics 2022?<\/strong><\/p>\n<p>There are chances that banks may even fail in a stable condition. The reason given by them were the balance that bank has to maintain even in an ideal condition. That is, a bank has to turn short-term deposits into long-term lending.<\/p>\n<p>Short term deposits are the deposits made by the people whereas long-term lending is given by banks in the form of loans.<\/p>\n<p>Banks lend these deposits in the form of loans but there are instances of withdrawing those deposits by the depositors. It creates an imbalance.<\/p>\n<p>However, unforeseen circumstances faced by the depositors (economic or political events of the nation) can make them feel uncertain of their deposits and can lead to withdrawal of the money.<\/p>\n<p>This kind of situation will make banks to run out of the cash and it will affect their business.<\/p>\n<p>Therefore, it is better to offer deposit insurance to the depositors to prevent such a crisis.\u00a0This framework has been explained by Diamond and Dybvig.<\/p>\n<p>They explained how financial development affects the rest of the economy and the effects of monetary policy on banks\u2019 portfolio choices.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Source: The post is based on an article\u00a0\u201cThe bigger picture of intermediation, financial crises\u201d published in\u00a0The Hindu\u00a0on\u00a017th October 2022. Syllabus: GS 3 \u2013 Economic Development Relevance:\u00a0findings of the Nobel Prize winner in economics News: \u00a0This article highlights the role played by financial sector and banks in particular, in the development of modern economies. Nobel Prize&hellip; <a class=\"more-link\" href=\"https:\/\/forumias.com\/blog\/the-bigger-picture-of-intermediation-financial-crises\/\">Continue reading <span class=\"screen-reader-text\">The bigger picture of intermediation, financial crises<\/span><\/a><\/p>\n","protected":false},"author":10320,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"jetpack_post_was_ever_published":false,"footnotes":""},"categories":[1230,9],"tags":[216,10498],"class_list":["post-210807","post","type-post","status-publish","format-standard","hentry","category-9-pm-daily-articles","category-public","tag-gs-paper-3","tag-the-hindu","entry"],"jetpack_featured_media_url":"","views":{"total":0,"cached_at":1700807629,"cached_date":1704823030},"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/210807","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/users\/10320"}],"replies":[{"embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/comments?post=210807"}],"version-history":[{"count":0,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/posts\/210807\/revisions"}],"wp:attachment":[{"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/media?parent=210807"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/categories?post=210807"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/forumias.com\/blog\/wp-json\/wp\/v2\/tags?post=210807"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}