Which of the following would most likely reduce the number of bank failures?

Question

Quizplus · Accepted Answer

Creating a system of deposit insurance would reduce the number of bank failures by providing protection to depositors in cases of bank insolvency. This would increase confidence in the banking system and reduce the likelihood of bank runs, ultimately leading to a healthier banking sector. The other options would not necessarily result in a reduction in bank failures; an increase in the number of small banks or tighter restrictions on interstate banking could potentially lead to fragmentation or reduced competition in the banking sector, while encouraging banks to make more risky loans could increase the likelihood of loan defaults and bank failures.

Which of the Following Would Most Likely Reduce the Number