The primary purpose of deposit insurance is to
A)improve the flow of information to investors.
B)prevent banking panics.
C)protect bank shareholders against losses.
D)protect bank employees from unemployment.

Question

Quizplus · Accepted Answer

The primary purpose of deposit insurance is to prevent banking panics by protecting depositors' funds in the event of a bank failure. This helps maintain confidence in the banking system and prevents runs on banks, which can destabilize the financial system. The other options given are not a primary purpose of deposit insurance.

The Primary Purpose of Deposit Insurance Is to