Question: 14 When a small bank has financial problems, the banking authorities are likely to close it down, leading to substantial losses for uninsured depositors and

14 When a small bank has financial problems, the banking authorities are likely to close it down, leading to substantial losses for uninsured depositors and the bank’s stockholders. Yet a big bank in the same trouble may be saved by the banking authorities. Is this a sensible solution? Can it be defended on the grounds of economic efficiency?

What about on the grounds of equity (fairness)?

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