Which of the following is a drawback of charging flat deposit insurance premiums?

Question

Quizplus · Accepted Answer

Charging flat deposit insurance premiums means that all banks pay the same premium rate regardless of their risk level. This means that low-risk banks are paying the same premium as high-risk banks, which could lead to an overpayment by low-risk banks and an underpayment by high-risk banks. This can also create a moral hazard where high-risk banks have less incentive to improve their risk management practices since they are not paying a higher premium rate.

Which of the Following Is a Drawback of Charging Flat