An article in the Wall Street Journal on the shadow banking system contained the following$$ observation: $"$If investors rush to the exits en$$ masse, acting as a$$ herd, asset prices could plummet and markets could face funding$$ problems."

$$Source: lan$$ Talley, "IMF Warns$($Again$)$ of Growing$$ Shadow$-$Banking Risks," Wall Street Journal$,$ April$8,2015.$

Part $2$

Why might investors in a money market mutual$$ fund, for$$ example, be more likely to$$ "rush to the$$ exits" if they heard bad news about the$$ fund's investments than would bank depositors if they received bad news about their$$ bank's investments?

A$.$

A small share of assets in the shadow banking system are managed by a large number of institutional investors who are more likely to react to bad news about the$$ fund's investments than the small number of bank depositors with relatively large holdings.

B$.$

It is easier to buy and sell assets in the mutual fund money market than it is to adjust deposits in the banking system.

C$.$

Investors in the shadow banking system are better informed about news related to the$$ fund's investments than are bank depositors about news related to their$$ banks' investments.

D$.$

Money market mutual funds are not protected by deposit$$ insurance, as commercial$$ banks' deposits are through the Canada Deposit Insurance Corporation$($CDIC$).$