Which of the following is least likely to accompany financial consolidation and the development of large,complex banking organizations?

Question

Quizplus · Accepted Answer

Financial consolidation and the development of large, complex banking organizations are likely to increase moral hazard problems rather than decrease them. Therefore, it is unlikely that moral hazard problems will become less important.

Other options: 
A) is possible as larger banks may be seen as too big to fail and pose systemic risks. 
B) is also possible as the government may choose to extend the safety net to nonbanking activities to protect the overall financial system. 
D) is also possible as larger banks may have more resources and capabilities to take on more risk, but this may also lead to greater exposure to potential losses.

Which of the Following Is Least Likely to Accompany Financial