Exam 9: Economic Analysis of Financial Regulation

The result of the too-big-to-fail policy is that ________ banks will take on ________ risks, making bank failures more likely.

The government safety net creates ________ problem because risk-loving entrepreneurs might find banking an attractive industry.

Agreements such as the ________ are attempts to standardize international banking regulations.

The chartering process is similar to ________ potential borrowers and the restriction of risk assets by regulators is similar to ________ in private financial markets.

Describe how the CDIC premiums have evolved over the past years.

The evidence from banking crises in other countries indicates that ________.

When regulators chose to allow insolvent S&Ls to continue to operate rather than to close them, they were pursuing a policy of ________.

When one party to a transaction has incentives to engage in activities detrimental to the other party, there exists a problem of ________.

Bank failures in Canada arose due to historical accident, including ________ and ________.

The Differential Premiums By-law classifies CDIC institutions according to their risk profile. ________ dominate the criteria.

The chartering process is especially designed to deal with the ________ problem, and regular bank examinations help to reduce the ________ problem.

The existence of deposit insurance can increase the likelihood that depositors will need deposit protection, as banks with deposit insurance ________.

Under the Basel Accord, assets and off-balance sheet activities were sorted according to ________ categories with each category assigned a different weight to reflect the amount of ________.

A bank failure is less likely to occur when ________.

FDICIA ________ incentives for banks to hold capital and ________ incentives to take on excessive risk.

Deposit insurance has not worked well in countries with ________.

China is trying to move its banking system from being strictly ________ owned by having them issue shares overseas.

Bank examiners include ________.

Sometimes regulators refrain from putting insolvent banks out of business. This is also known as ________.

Deposit insurance is only one type of government safety net. All of the following are types of government support for troubled financial institutions except ________.