The larger the bank the better is the ability to diversify.

The larger the bank the better is the ability to diversify. As a diversified portfolio of assets is a public good, regulators  should not limit the size of banks, despite the significant negative externalities failures of larger banks tend to impose on the public ,discuss.

Assessment criteria:

• Demonstrated knowledge of the nature of a bank, financial risks and asymmetric information.
• Logical inferences drawn from information presented and appropriate justification of

            stance taken.

• Overall presentation of the argument is relevant and appropriate