Banks are more than financial institutions; they shape the economic trajectory of individuals, businesses, and entire nations. In this first part, Economist and Hoover Institution Senior Fellow Ross Levine explains why banks play such a critical role in financial stability, how their balance sheets create inherent risks, and why governments regulate them. But regulations don’t always work as intended — sometimes, they increase fragility rather than reduce it. Understanding how banks operate is key to understanding both economic growth and financial crises.
Check out more from Ross Levine:
Read “Competition, Stability, and Efficiency in the Banking Industry” by Ross Levine here: https://www.hoover.org/research/competition-stability-and-efficiency-banking-industry-0
Watch “Much Money, Little Capital, and Few Reforms: The 2023 Banking Turmoil” with Ross Levine here: https://www.youtube.com/watch?v=Gf2E1aVh-pM
Read Ross Levine’s Commentary “Trump Wants to Unleash the Banks. End the Bailout Culture First.” in Barron’s Magazine here: https://www.barrons.com/articles/trump-bank-deregulation-2008-dodd-frank-3a94a33c?reflink=desktopwebshare_permalink
Learn more about Ross Levine here: https://www.hoover.org/profiles/ross-levine
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The opinions expressed in this video are those of the authors and do not necessarily reflect the opinions of the Hoover Institution or Stanford University.
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