Everyone may have some advise for the RBI. Some may advise, 'Cut your lending rates and raise the deposit rate.' How will a bank function? We take a medium term view. The bank has an 80-year-old history. I don't want to destroy it for a few decisions.
Interpretation
This quote emphasizes the importance of long-term stability over short-term fixes in banking.
Raghuram Rajan highlights the complexity of banking decisions where quick solutions, like altering lending and deposit rates, might seem beneficial but can jeopardize a bank’s long-term reputation and function. He underscores the need for a thoughtful, medium-term perspective, considering the rich history and stability of the institution.
In practice
During a financial seminar discussing banking strategies.
The U.S. should worry about the effects of its polices on the rest of the world. We would like to live in a world where countries take into account the effect of their policies on other countries and do what is right, broadly, rather than what is just right given the circumstances of that country.
Customers often value a good more when its price goes up. One reason may be its signaling value. An expensive handcrafted mechanical watch may tell time no more accurately than a cheap quartz model; but, because few people can afford one, buying it signals that the owner is rich.
The problem with forbearance is that it always looks like a good thing to do until it stops working.
Perhaps the hardest challenge has been to persuade the public, impatient for rapid growth, of the need to ensure stability first. Growth, it is argued, is always more important, regardless of the looming economic risks.
Too many years away from academia renders you pretty incompetent at research and teaching. So I had to go back.
The gap in India has always been between the promise and the execution.
The poor don't live in functional market economies as the rest of us do, but in political economies where corruption and broken systems extend from local government to moneylenders.
Microfinance recognizes that poor people are remarkable reservoirs of energy and knowledge, posing an untapped opportunity to create markets, bring people in from the margins and give them the tools with which to help themselves.
Markets can influence the events that they anticipate.
Bailing out every bank that fails makes the system riskier, not safer.
The black market was a way of getting around government controls. It was a way of enabling the free market to work. It was a way of opening up, enabling people.
An economy hampered by restrictive tax rates will never produce enough jobs or enough profits
Subscribe for the occasional hand-picked quote. No noise.