Question: An article in the Wall Street Journal on the shadow banking system contained the following observation: If investors rush to the exits en masse, acting

An article in the Wall Street Journal on the shadow banking system contained the following observation: "If investors rush to the exits en masse, acting as a herd, asset prices could plummet and markets could face funding problems." Why might people who have invested in a money market mutual fund, for example, be more likely to "rush to the exits" if they heard bad news about the fund's investments than would bank depositors if they received bad news about their bank's investments?

Step by Step Solution

3.44 Rating (160 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Money market mutual funds are not protected by deposit insurance as commer... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

1347-B-A-A-M-E(1187).docx

120 KBs Word File

Students Have Also Explored These Related Micro Economics Questions!