In Diamond’s (1984) delegated monitoring model, banks exist…

In Diamond’s (1984) delegated monitoring model, banks exist because they solve a specific cost problem. If there are N depositors and M borrowers who each need monitoring, what is the key cost advantage of delegating monitoring to a bank rather than having each depositor monitor directly?

Under US banking regulations, a national bank’s lending limi…

Under US banking regulations, a national bank’s lending limit to a single borrower is generally 15% of unimpaired capital for unsecured loans and 25% for loans secured by readily marketable collateral. A bank has $2 billion in unimpaired capital. What is the maximum unsecured loan it can make to a single borrower?