We can't eliminate crises, but we can limit their severity.
An abundance of loans can create a debt overhang that causes lenders to pull back—and the ensuing credit crunch can make it harder for businesses to grow, or even to repay their debts.
In the model, the mismatch between assets (loans) and liabilities (deposits) is simply a liquidity issue, which deposit insurance can help address.
Merton H. Miller liked to tell a joke about Yogi Berra, the famous baseball catcher. Berra once told his trainer that he was particularly hungry, and he instructed him to cut his pizza into 12 pieces instead of six.