Regulators attempt to reduce the riskiness of banks' asset portfolios by

Question

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Limiting the amount of loans in particular categories or to individual borrowers is a common regulatory strategy to reduce the riskiness of banks' asset portfolios. This helps ensure that banks do not become overly exposed to certain types of borrowers or industries, mitigating the potential for large-scale losses if those categories experience financial difficulty.

Regulators Attempt to Reduce the Riskiness of Banks' Asset Portfolios