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.
This is the paradox of thrift: belt-tightening causes people to lose their jobs, because other people are not buying what they produce, so their debt burden rises rather than falls.
It is my guiding confession that I believe the greatest error in economics is in seeing the economy as a stable, immutable structure.
Stopping illegal immigration would mean that wages would have to rise to a level where Americans would want the jobs currently taken by illegal aliens.
I think if you look back through time, the history of income, wealth and taxation is full of surprise. So I am not terribly impressed by those who know in advance what will or will not happen.
If a tax cut increases government revenues, you haven't cut taxes enough.
I think economics - and this is what I've tried to impart - has a tremendous amount of human interest in it.
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