As a result of government provided deposit insurance, the ratio of assets to capital for commercial banks since the 1920s has:

Question

Quizplus · Accepted Answer

Government provided deposit insurance has reduced the risk of commercial banks by insuring depositors' accounts, which has led to an increase in the ratio of assets to capital for commercial banks since the 1920s. With reduced risk, commercial banks can hold fewer capital reserves and lend more money, resulting in a significant increase in the asset-to-capital ratio by almost triple.

As a Result of Government Provided Deposit Insurance, the Ratio