Prefer maintaining accounts with large too big to fail banks

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Some analysts claim that many wealthy depositors prefer maintaining accounts with large “too big to fail” banks, even if they could earn higher interest rates from smaller banks. Briefly explain why these depositors use this strategy? Based on your understanding, are there any negative consequences for the efficiency of the economy from depositors following this strategy, please explain the rationale behind your answer.

Reference no: EM13982520

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