Question

Does the notion of financial fragility challenge the neoclassical approach? Explain your answer in 4-5 sentences.

Answer 1

Yes, the notion of financial fragility challenge the neoclassical approach.

#Neo classical approach tells us that compitition leads to an efficient allocation of resources while Financial Fragility assumes that more often compitition can leads to financial crisis.

# Neo classical approach ignores vulnerability of human nature in making financial decisions while Financial Fragility is the vulnerability of a financial system to a financial crisis.