Question: 2. Using the Diamond and Dybvig (1983) model, explain the liquidity insurance theory for the existence of banks and their susceptibility to runs. This is

2. Using the Diamond and Dybvig (1983) model, explain the liquidity

2. Using the Diamond and Dybvig (1983) model, explain the liquidity insurance theory for the existence of banks and their susceptibility to runs. This is a 25 marks question please explain as clear as possible

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