Instability is not an inherent feature of the banking system, but is a consequence of mispriced deposit insurance and other government policies. To foster a truly safe and sound banking system, policymakers must better understand the business of banking and the real causes and effects, as opposed to the popular mythology, of bank failures.
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George G. Kaufman is the John F. Smith Professor of Finance and Economics at Loyola University Chicago.
| Other Independent Review articles by George G. Kaufman | |
| Winter 2002/03 | What Is Systemic Risk, and Do Bank Regulators Retard or Contribute to It? |
