Which of the following reforms would reduce the likelihood of a future financial crisis?
A) increased regulations that would make it more difficult for lenders to foreclose on borrowers who are delinquent on mortgage payments
B) expansion of government-sponsored lending in order to make loanable funds more readily available to sub-prime borrowers
C) institutional changes that would strengthen the property rights of shareholders and provide financial managers with a stronger incentive to pursue long-run objectives
D) frequent regulatory changes in order to search for and find the combination that would be most effective

Question

Quizplus · Accepted Answer

Institutional changes that would strengthen the property rights of shareholders and provide financial managers with a stronger incentive to pursue long-run objectives would reduce the likelihood of a future financial crisis by promoting responsible and sustainable financial management practices. The other options, such as increased regulations that make it difficult for lenders to foreclose on delinquent borrowers or expanding government-sponsored lending to sub-prime borrowers, may have unintended consequences and could potentially worsen the problem. Frequent regulatory changes can also create instability and uncertainty in the financial market.

Which of the Following Reforms Would Reduce the Likelihood of a Future