Regulations limiting risk taking of financial institutions are imposed because
A) the costs of regulation exceeds the benefits.
B) the private costs of failure exceed the social costs of failure.
C) the social costs of a general bank failure exceed the private costs to shareholders.
D) risk is harmful.
Correct Answer:
Verified
Q17: Private deposit insurance has not proven effective
Q18: Bailout of large banks by federal regulators
Q19: The FDIC charters many state banks.
Q20: The Glass Steagall restrictions separating investment and
Q21: While an individual bank's illiquidity may cause
Q23: All but one of the following has
Q24: The original purpose of deposit insurance was
Q25: The FDIC's use of purchase and assumption
Q26: Innovation around regulation followed by new regulation
Q27: Bank capital is the most reliable cushion
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