Bank risk taking can be controlled by increasing

Question

Quizplus · Accepted Answer

By setting risk-adjusted deposit insurance premiums, stockholders will have an incentive to monitor the bank's risk-taking behavior and potentially take action to control it. This is because they will face higher costs in the form of higher premiums for taking on excessive risk. This approach promotes market discipline, which is considered a more effective way of controlling risk-taking compared to regulatory discipline or expanding the doctrine of "too big to fail."

Bank Risk Taking Can Be Controlled by Increasing