Financial regulators set capital requirements for banks.One characteristic about these requirements is:

Question

Quizplus · Accepted Answer

Capital requirements for banks are typically based on the riskiness of their asset holdings. Banks with riskier assets are required to hold higher levels of capital to mitigate potential losses. This is intended to ensure that banks have sufficient cushion to absorb losses and maintain stability in the event of financial stress. The other options listed are not accurate - capital requirements are not uniform for all banks, the number of branches a bank has does not necessarily impact its capital requirements, and the relationship between assets and capital is not strictly inverse.

Financial Regulators Set Capital Requirements for Banks