The policy of allowing an insolvent or deeply troubled financial institution to continue to operate rather then being closed down by regulators is called:

Question

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Regulatory forbearance refers to the policy where regulators allow financial institutions that are insolvent or facing serious financial difficulties to continue operating instead of shutting them down. This approach is often taken in the hope that the institution will recover over time, avoiding the potential negative impacts on the financial system that could result from its immediate closure.

The Policy of Allowing an Insolvent or Deeply Troubled Financial