Negative externalities exist in the depository sector when:

Question

Quizplus · Accepted Answer

All of the listed options are correct. Negative externalities can occur in the depository sector when there is fear of DI insolvency that leads to bank deposit runs, when lending activity is impaired or constrained, and when there are delays in disbursements from insolvent DIs. These externalities can have ripple effects throughout the financial system and the broader economy, highlighting the need for effective regulatory oversight and risk management practices within the sector.

Negative Externalities Exist in the Depository Sector When