【分析解答题】

That firms which strive hard to sustain profits may act incautiously is a concern in many industries. The severity of today’s financial crisis is blamed by some on the pressure of competition on banks. There is a bulky academic literature that links liberalisation of markets with an increase in bank failures. It argues that the lifting of restraints, such as interest-rate caps on deposits or rules that prevent banks from operating in certain markets, leads to more intense competition. That is good for borrowers, but it also hurts banks’ profit margins by reducing the "franchise value" that comes from expected earnings.

A、diminished franchise is not only bad for shareholders.By reducing the stake that banks have in their own long-term survival it may make bank failures more likely.A、bank that could look forward to a stream of fat profits in a sheltered market would be careful to lend prudently to avoid a bankruptcy that would destroy the franchise.But a bank earning only lean and uncertain margins on garden-variety (普通的) loans may have little to lose by gambling on riskier ventures. If these paid off, the bank would benefit. If they did not, depositors or government would pick up the bill.