What would be actual consequences if banks (or other large companies) weren’t bailed out by the government. Would financial crashes be worse?
In: Economics
Context? Banks and businesses generally aren’t bailed out, and when they are there’s a specific reason for it (not all the same).
For something like the financial crisis banks were mostly given bridge financing they had to pay back with interest. Letting them all die would have caused more harm for sure, and not had a lot of immediate benefits. Post bailouts maybe a different story, as TBTF banks arguably had lower financing costs than smaller rivals. Though, not a lot of benefits from having stronger small banks.
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