A common feature of banking regulations around the world is that they often require banks to have more equity on their balance sheet. What is the purpose of regulation that requires more equity?

Group of answer choices

an increase in equity will increase bank profitability, which is desirable because a profitable banking industry is important for the entire economy

to minimize the too big to fail problem

an increase in equity will reduce bank profitability, which is desirable because bank profits are higher than other industries

an increase in equity will reduce the likelihood that a bank becomes insolvent