Exam 11: Economic Analysis of Financial Regulation

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

One of the criticisms of Basel 2 is that it is procyclical.That means that

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

Deposit insurance has not worked well in countries with

Acquiring information on a bank's activities in order to determine a bank's risk is difficult for depositors and is another argument for government ________.

Higher capital requirements will reduce the problems incurred when troubled ________ which had been off-balance sheet activities come back on the balance sheet.

Moral hazard is an important concern of insurance arrangements because the existence of insurance

The collapse of the Bank of Credit and Commerce International,BCCI,showed the difficulty of international banking regulation.BCCI operated in more than ________ countries and was supervised by the small country of ________.

The Depository Institutions Deregulation and Monetary Control Act of 1980

Investment banks that are part of ________ are regulated and supervised like banks.

How did the increase in the interest rates in the early 80s contribute to the S&L crisis?

Banks are required to file ________ usually quarterly that list information on the bank's assets and liabilities,income and dividends,and so forth.

Because of asymmetric information,the failure of one bank can lead to runs on other banks.This is the

The Basel Committee ruled that regulators in other countries can ________ the operations of a foreign bank if they believe that it lacks effective oversight.

That several hundred S&Ls were not even examined once in the period January 1984 through June 1986 can be explained by

The ability to use the too-big-to-fail policy was curtailed by the passage of the FDICIA.To use this action today,the FDIC must get approval of a two-thirds majority of both the Board of Governors of the Federal Reserve and the directors of the FDIC and also the approval of the ________.

The Resolution Trust Corporation was created by the FIRREA in order to

Federal deposit insurance covers deposits up to $100,000,but as part of a doctrine called "too-big-to-fail" the FDIC sometimes ends up covering all deposits to avoid disrupting the financial system.When the FDIC does this,it uses the

The evidence from banking crises in other countries indicates that

Reasons regulators chose to follow regulatory forbearance rather than to close the insolvent S&Ls include all of the following except