A common element in all of the banking crisis episodes in different countries is

Question

Quizplus · Accepted Answer

The existence of a government safety net is a common element in all banking crisis episodes. This safety net creates a moral hazard problem by encouraging bankers to take more risk than they would otherwise take, knowing that the government will protect depositors and creditors from losses. This can lead to excessive risk-taking and ultimately a banking crisis.

A Common Element in All of the Banking Crisis Episodes