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[6] Bank and nonbank financial institutions have different regulatory requirements. (a)Why are depositary financial institutions required to have financial reserves? Explain with relevant banking examples.

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[6] Bank and nonbank financial institutions have different regulatory requirements. (a)Why are depositary financial institutions required to have financial reserves? Explain with relevant banking examples. (b) What are risk-adjusted reserve ratios? Explain with relevant banking examples. (c) Why are excess reserves considered a form of bank insurance? Explain with relevant banking examples

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