Which of the following policies might bank regulators require a bank to take in order to reduce excessive risk taking?
A)cut dividends
B)fire managers
C)slow the growth of assets
D)cut dividends, fire managers, and/or slow the growth of assets

Question

Quizplus · Accepted Answer

Bank regulators may require a combination of policies to reduce excessive risk taking, such as cutting dividends, firing managers who are making risky decisions, and slowing the growth of assets. Cutting dividends will reduce the amount of money that shareholders receive, which can incentivize them to demand that the bank take less risk. Firing managers who are taking excessive risks can signal to other employees that risk taking is not acceptable, and can prevent other managers from taking similar risks in the future. Finally, slowing the growth of assets can reduce overall risk exposure, as larger banks may be more likely to take on greater risks.

Which of the Following Policies Might Bank Regulators Require a Bank