Deposit insurance

A. reduces the incentives of depositors to monitor the riskiness of their banks' asset portfolios.

B. encourages bank managers to take on greater risks than they otherwise would

C. attracts risk-prone entrepreneurs to the banking industry

D. does all of the above

Question

Aden Dunn

Social Studies

18 July, 21:51

Deposit insurance

A. reduces the incentives of depositors to monitor the riskiness of their banks' asset portfolios.

B. encourages bank managers to take on greater risks than they otherwise would

C. attracts risk-prone entrepreneurs to the banking industry

D. does all of the above

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Answers (1)

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Leonard Mckenzie · Answer 1

Answer: Does all of the above

Explanation: Deposits insurance are insurance put about by government to strengthen the safety net for bank depositors in the banking sector.

They protect bank depositors from uncertainty and unforeseen circumstances that may arise in their banks. To do these, they advise bank managers and customers on policies so as to ensure their deposits are safe (depositors) and the bank doesn't liquidate (bank Managers)

Deposit insuranceA. reduces the incentives of depositors to monitor the riskiness of their banks' asset portfolios.B. encourages bank managers to take on greater risks than they otherwise wouldC. attracts risk-prone entrepreneurs to the banking industryD. does all of the above

Deposit insurance

A. reduces the incentives of depositors to monitor the riskiness of their banks' asset portfolios.

B. encourages bank managers to take on greater risks than they otherwise would

C. attracts risk-prone entrepreneurs to the banking industry

D. does all of the above