Question

Explain the argument that asymmetric information between depositors and bank managers justifies the need for an institution such as the FDIC.

Answer 1

Commercial banks in most of the country are still operated though paper work and thus going through all the document will require huge time . There by the banking system in many countries are still not developed . The depositor donot have proper communication with the bank manager. Many time people need to keep on waiting for the work being completed in the bank . The bank policy are not crear to the depositor . There are many programms stated by the government for the welfare of the country yet all those programmes are not aware to the people and depositors . There should be institution (FDIC) which can make the people aware , communicate the benefits of varous programme runned by the government . These institution will support banks for geting digitalized and the commucation gap between the bank maneger and the depositor will be reduces to much extent . Manager will be able to have few on each and ever depositors a/c and provind suggestion to the customer , initiating the habit of savings and investment and insurance policy to over come the lose and risk , provide finance for the business and other loan