Why financial intermediaries fail
Acton Institute Powerblog

Why financial intermediaries fail

Note: This is post #91 in a weekly video series on basic economics.

Financial intermediaries serve as a bridge between borrowers and savers. When those bridges collapse the effects can be disastrous: businesses go bankrupt, workers get laid off, and people lose their homes. These negative effects show you how crucial intermediaries are to our lives.

What exactly causes financial intermediaries to fail? In this video by Marginal Revolution University, economist Tyler Cowen looks at four reasons: insecure property rights, controls on interest rates, politicized lending, and “runs, panics, and scandals.”

(If you find the pace of the videos too slow, I’d recommend watching them at 1.5 to 2 times the speed. You can adjust the speed at which the video plays by clicking on “Settings” (the gear symbol) and changing “Speed” from normal to 1.25, 1.5 or 2.)

Click here to see other videos in the Introduction to Economics series.

Joe Carter

Joe Carter is a Senior Editor at the Acton Institute. Joe also serves as an editor at the The Gospel Coalition, a communications specialist for the Ethics and Religious Liberty Commission of the Southern Baptist Convention, and as an adjunct professor of journalism at Patrick Henry College. He is the editor of the NIV Lifehacks Bible and co-author of How to Argue like Jesus: Learning Persuasion from History's Greatest Communicator (Crossway).