Deposit insurance shifts most of the financial risk of bank failures from depositors to ________.

Question

Quizplus · Accepted Answer

Deposit insurance is typically provided by the federal government and is designed to protect depositors in the event that a bank fails. By shifting the risk of bank failures from depositors to the federal government, deposit insurance helps to ensure that depositors do not lose their savings due to the failure of a bank. This also provides an incentive for depositors to continue having confidence in the banking system and to continue making deposits, which helps to maintain the stability of the financial system as a whole.

Deposit Insurance Shifts Most of the Financial Risk of Bank