The use of high leveraging by banks leads to the banking system's:
A) Competitiveness
B) Instability
C) Vital role in the economy
D) Monopoly power

Question

Quizplus · Accepted Answer

High leveraging by banks can lead to instability within the banking system, as it increases the potential for financial losses in the event of a downturn or crisis. This was seen during the 2008 financial crisis, where banks with high levels of leverage were particularly vulnerable and contributed to the overall instability of the financial system.

The Use of High Leveraging by Banks Leads to the Banking