The regulatory practice of excessive capital forbearance is a method of reducing the short-run and long-run costs to deposit insurance funds.

Question

Quizplus · Accepted Answer

The regulatory practice of excessive capital forbearance is actually a method of increasing the short-run costs to deposit insurance funds because it allows banks to continue operating with inadequate capital, which increases the likelihood of a failure and the subsequent costs to the deposit insurance fund.

The Regulatory Practice of Excessive Capital Forbearance Is a Method