Bank regulation exists because public authorities are convinced that
A)the balance between public interest and safety does not affect profitability, and should be removed from the hands of managers.
B)the balance between bank profitability and public interest cannot be handled with legislation, but can be handled with regulation.
C)the balance between bank profitability and safety cannot be left to profit-maximizing managers.
D)the balance between bank safety and public interest can best be obtained by reliance on the market.

Question

Quizplus · Accepted Answer

Bank regulation exists because public authorities believe that the balance between bank profitability and safety cannot be left solely in the hands of profit-maximizing managers. Regulation is seen as necessary to protect the interests of the public and ensure the safety and stability of the financial system. A and D are incorrect because they do not reflect the primary reasons for bank regulation, while B is only partially correct as legislation can also play a role in achieving the desired balance between bank profitability and public interest.

Bank Regulation Exists Because Public Authorities Are Convinced That