Instead of abandoning competition and giving banks protected monopolies once again, the public would be better served by making it easier to close banks when they get into trouble. Instead of making banking boring, let us make it a normal industry, susceptible to destruction in the face of creativity.
Interpretation
Encourages competition in banking to foster innovation and protect consumers.
Raghuram Rajan emphasizes the importance of maintaining competition in the banking industry rather than allowing banks to operate in a monopolistic environment. He argues that by making it easier to close failing banks, the industry can become more dynamic and adapted to change, encouraging creativity and benefiting the public.
In practice
In a discussion about economic reforms, this quote can highlight the need for competitive banking policies.
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.
If you go back to the really long-run questions that interested me, the big question was why, over the centuries, the millennia, has growth been speeding up?
It is better that a man should tyrannize over his bank balance than over his fellow-citizens and whilst the former is sometimes denounced as being but a means to the latter, sometimes at least it is an alternative.
Prosperous farmers mean more employment, more prosperity for the workers and the business men of every industrial area in the whole country.
I'm quite worried about the fiscal imbalances that we've got and what that might mean in terms of financial crisis ahead.
Drug companies spend more on advertising and marketing than on research, more on research on lifestyle drugs than on life saving drugs, and almost nothing on diseases that affect developing countries only. This is not surprising. Poor people cannot afford drugs, and drug companies make investments that yield the highest returns.
Living capital, which has the special capacity to continuously regenerate itself, is ultimately the source of all real wealth. To destroy it for money, a simple number with no intrinsic value, is an act of collective insanity - which makes capitalism a mental, as well as physical pathology.
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