The likelihood of a bank run is reduced if:Multiple ChoiceA- the bank has sufficient...

The likelihood of a bank run is reduced if:

Multiple Choice

A- the bank has sufficient equity capital

B- the government offers deposit insurance

C- the bank engages in maturity transformation

D- A and B

E- A, B, and C

Solutions

Expert Solution

When large number of bank depositors take out their money from bank to affect solvency of bank then it is known as bank run.

Here All the options are True. hence option E is correct

A- the bank has sufficient equity capital

B- the government offers deposit insurance

C- the bank engages in maturity transformation

All the options reduce bank run.

jeff jeffy answered 1 year ago

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