The consequences of banks having insufficient capital

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1. Entrepreneurs in Somalia have managed to carry out a substantial amount of banking activity using cell phones. Are there certain banking activities that are difficult to carry out when relying exclusively on cell phones and Web sites?

2. The Capital Purchase Program carried out under TARP represented an attempt by the federal government to increase the capital of banks. Why would the federal government consider it important to increase bank capital? What might be some of the consequences of banks having insufficient capital?

Reference no: EM131304987

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