Why Should a Bank Exist?

Before 1980, banks were primarily thought of as intermediaries connecting borrowers and lenders. Ben Bernanke would offer another complementary view of why banks were central to the crisis. The failure of the banking system also imposed a cost on both lenders and borrowers. Without banks, a small business owner would have great difficulty sourcing funds at an attractive interest rate. In summary, banks must survive an economic recession. If they don't, the recession could soon give way to a catastrophe.