12. (5 points) In the debate on micro-finance it is often said that it is difficult to lend to the poor because they lack financial collaterals. Assume now that the poor will have a collateral that is sufficiently large. More specifically, assume that c>5 in the game tree below. (Remember, we analyzed this game tree in class.) no loan (0,0) Bank pay back (2,2) loan accept (-5,5) Borrower default Bank c is the collateral, and t is a transaction cost. (-5+c-4,5-c) get collateral Consider now the following claim: "Because there is a collateral that is sufficiently large, that is c > 5, it is in the bank's best interest to make a loan to the borrower. Discuss this claim by using the game tree depicted above. 12. (5 points) In the debate on micro-finance it is often said that it is difficult to lend to the poor because they lack financial collaterals. Assume now that the poor will have a collateral that is sufficiently large. More specifically, assume that c>5 in the game tree below. (Remember, we analyzed this game tree in class.) no loan (0,0) Bank pay back (2,2) loan accept (-5,5) Borrower default Bank c is the collateral, and t is a transaction cost. (-5+c-4,5-c) get collateral Consider now the following claim: "Because there is a collateral that is sufficiently large, that is c > 5, it is in the bank's best interest to make a loan to the borrower. Discuss this claim by using the game tree depicted above