URGENTT Type T/F for each statement and PLEASEEE EXPLAIN WHY: Eliminating or lim

Question

URGENTT

Type T/F for each statement and PLEASEEE EXPLAIN WHY:

Eliminating or limiting the amount of deposit insurance could create less moral hazard

Imposing bank capital requirements on banks will stop all risk taking

Competition was one reason for risk taking leading to abandonment of Glass-Steagall

Basel II demands that banks hold more capital in good times and less capital in bad times to prevent a credit crunch

Dual Banking system in the US is composed of shadow banks and traditional banks

Consumer protection is just as important to protect as is the banking industry's risks

Explanation / Answer

Ture: Eliminating or limiting the amount of deposit insurance would help reduce the moral hazard because it will reduce the excessive risk imposed on the banks.

True: More the capital mre is the ability of the banks to take risk. however in this case they will refrain because of loosing the execsscapital they have.

True: Due to the stock market crash in 1929 to seperate investment and commercial activities. however this hindered thr financial services from being competitiv and was repealed in 1999

True. TThis is to safguard banks against the defaulters and the situation of bank panics

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