Bank failure is less likely to occur when a bank

Question

Quizplus · Accepted Answer

Banks holding more excess reserves have a greater ability to absorb unexpected losses and continue to meet their obligations, making bank failure less likely. Holding fewer U.S. government securities or suffering large deposit outflows could both reduce a bank's ability to meet its obligations and increase the likelihood of failure. Having less bank capital also reduces a bank's ability to absorb losses and maintain solvency.

Bank Failure Is Less Likely to Occur When a Bank