Q.5 What are the costs and benefits ... [FREE SOLUTION] (2024)

The costs of too-big-to-fail policy are as per the following:

- The too-big-to-fail policy would expand the level of hazard-taking exercises.

- Bank wouldn't be worried about the depositors who have little motivators in monitoring the bank's unsafe exercises.

The benefits of too-big-to-fail policy are as per the following:

- The too-big-to-fail policy gives monetary confirmation to depositors.

- Too-big-to-fail policy would increment moral peril motivating forces for nonbank monetary foundations.

- It is valuable to big banks rather than little banks.

- Too-big-to-fail policy assists with overseeing risk efficiently.

- Policy would offer security to depositors as well as creditors.

The Too-big-to-fail policy upholds huge monetary foundations and offers advantages to depositors and creditors.