Which of the following is designed to prevent bank runs?
A)debt overhang
B)deposit insurance
C)credit crunch
D)shadow banks

Question

Quizplus · Accepted Answer

Deposit insurance is designed to prevent bank runs by giving depositors the assurance that their deposits are insured up to a certain amount. This helps to prevent panic among depositors and reduces the likelihood of a run on the bank. Debt overhang refers to a situation where a company has too much debt and is unable to make investments or pay dividends. A credit crunch refers to a situation where credit is tight and lenders are reluctant to lend money. Shadow banks refer to financial intermediaries that operate outside the traditional banking system.

Which of the Following Is Designed to Prevent Bank Runs