A bank's main objective, like any business, is to make a profit.
Banks specialize in making loans.
The financial industry is one of the most regulated in the economy. The first problem we discussed is adverse selection . When there exists adverse selection, the qualities of the pool of buyers changes when information is not freely known to all. Thus, they could not offer suicide insurance and make a profit. To counteract adverse selection, a company could try to collect information about the characteristics of its customers, and a potential buyer could signal that they were not about to kill themselves.