Which of the following is NOT a reason that firms in the shadow banking system were more vulnerable than commercial banks during the financial crisis of 2007-2009?
A) They made investments that would lose value if housing prices decline.
B) They were more heavily regulated than commercial banks, making them less able to adjust to changing market conditions.
C) They could invest in riskier assets.
D) Investors had no insurance against loss of principal.
Answer: B
Money and Banking
- Banks have a maturity mismatch since
- Which government agency regulates futures markets?
- What regulatory change did Congress approve in 2010 to reduce counterparty risk in the shadow banking system?
- The shadow banking system refers to
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- Mutual funds
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- A syndicate is
- The due diligence process refers to
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- National banks are chartered by the
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