Provides funding for identical loan to different individual

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a. Prosper is a website that allows people to solicit loans from other individuals. The lenders can view information about the borrower and the type of loan being solicited. List and explain two ways in which a lender on Prosper differ from a person with a checking account at a bank, which provides funding for an identical loan to a different individual?

b. The First Bank of Springfield practices fractional reserve banking, but does not make any loans? How can it make a profit?

c. Two years later, you are told that First Bank of Springfield failed. Provide two possible stories for the failure that are consistent with its business model (one of these must assume that the bank was not insolvent).

d. The Second Bank of Springfield boasts that it will keeps depositors money safe by keeping 50% of depositor money in the bank’s vault. However, it is having a hard time attracting investors. Why might this be the case? (You may not use the risk of a bank robbery as your reason)

Reference no: EM131003269

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