Our researchers used several of the Bank’s economic models to examine these issues. 4  3  There is now a growing body of academic research examining these issues.
For a long time, it was assumed that an efficient capital market, effective competition among banks, a deposit insurance system, together with prudential supervision and financial market oversight were enough to provide all the protection actually needed. In the late ‘70s, the relevance of information asymmetries in financial markets was eventually recognized.