4 Price stability is deemed to be the optimal target to reduce the misallocation of resources across various goods-producing sectors. However, this result holds only in the absence of asset price shocks. If there is a shock to asset prices, particularly when the shock is unrelated to fundamentals, stabilising asset prices reduces the distortions that may affect investment decisions.
While there is certainly more to say about banking services in cities, I want to focus on rural areas for the moment. Over the last 20 years, rural westerners have consistently had access to something like 20 percent fewer banks than rural easterners, which amounts to about one less bank per rural county.