Neeeeeeeeeeeeeeeeeeeeeeeeeed help! what does "affects the banks'......not fail" mean in the context?
an increase in the banks’ external cost of funding, driven by an increase in reserve requirement, affects the banks’ bottom line only in those states of the world in which the bank actually repays its debt, that is, when it does not fail.
- OiyLv 41 month agoBest Answer
The bank will not collapse if it can still repay its debts. In fact, it will collapse due to the bank-run, so confidence.
- 1 month ago
OK, so this
- an increase in the banks’ external cost of funding, driven by an increase in reserve requirement
affects the banks' bottom line
only in those nations in which banks are required to repay their debt
only if the bank has not failed (has not closed) in the meantime