Excess reserves make a bank less vulnerable to runs, but bankers do not like to hold excess reserves because holding excess reserves
A)are disliked by depositors.
B)means lower profits for banks.
C)are discouraged by government regulators.
D)All of the above are correct.

Question

Quizplus · Accepted Answer

Holding excess reserves means that the bank is not lending out all of their available funds, which means they are not earning interest and potentially lower profits. The other options are not necessarily true - depositors do not typically care about excess reserves, and government regulators may or may not discourage excess reserves depending on the specific circumstances.

Excess Reserves Make a Bank Less Vulnerable to Runs, but Bankers