20-95 Bank regulators set minimum capital standards to

Question

Quizplus · Accepted Answer

Bank regulators set minimum capital standards to protect creditors from decreases in asset values. If a bank does not have enough capital to absorb losses, the creditors’ claims cannot be fully met, which can result in a banking crisis. By requiring banks to have a minimum amount of capital, regulators ensure that banks have a buffer to deal with potential losses and reduce the risk of systemic disruptions.

20-95 Bank Regulators Set Minimum Capital Standards to