Net regulatory burden for FIs is higher because regulators may require the FI to

Question

Quizplus · Accepted Answer

Regulatory burden on FIs often comes in the form of higher capital requirements that they must hold to ensure financial stability and mitigate risks. This means that FIs may need to hold more capital than they would without regulation.

Option B is incorrect because regulators usually require FIs to produce more information, not less, and this increases their burden.

Option C is incorrect because regulators generally advocate for FIs to hold less debt to reduce their leverage and risk-taking.

Option D is incorrect because regulators may require FIs to hold more reserves than they would without regulation, to ensure liquidity and stability.

Option E is incorrect because only option A is correct.

Net Regulatory Burden for FIs Is Higher Because Regulators May