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Banks are more than financial institutions; they shape the economic trajectory of individuals, businesses, and entire nations. In this first part, Economist and Hoover Institution Senior Fellow Ross Levine explains why banks play such a critical role in financial stability, how their balance sheets create inherent risks, and why governments regulate them. But regulations don’t always work as intended — sometimes, they increase fragility rather than reduce it. Understanding how banks operate is key to understanding both economic growth and financial crises. Check out more from Ross Levine: Read "Competition, Stability, and Efficiency in the Banking Industry" by Ross Levine here: https://www.hoover.org/research/compe... Watch "Much Money, Little Capital, and Few Reforms: The 2023 Banking Turmoil" with Ross Levine here: • Much Money, Little Capital, and Few Reform... Read Ross Levine's Commentary "Trump Wants to Unleash the Banks. End the Bailout Culture First." in Barron's Magazine here: https://www.barrons.com/articles/trum... Learn more about Ross Levine here: https://www.hoover.org/profiles/ross-... __________ The opinions expressed in this video are those of the authors and do not necessarily reflect the opinions of the Hoover Institution or Stanford University. © 2025 by the Board of Trustees of Leland Stanford Junior University. 🔔 Subscribe for more discussions: @HooverInstitution 👍 Like and share this video! 🌐 Follow the Hoover Institution on social media: • Facebook: / hooverinststanford • LinkedIn: / hoover-institution-at-stanford-university • Instagram: / hooverinstitution • X: / hooverinst