Question
If a banking regulator forces banks to increase the risk weights applied to a particular form of lending, what are the likely effects for this
If a banking regulator forces banks to increase the risk weights applied to a particular form of lending, what are the likely effects for this to have on the interest rates charged by banks on that type of loan, on the dividends paid by banks to bank shareholders, and on the share prices of banks? A. Interest rates will fall, dividends will fall, and share prices will fall. B. Interest rates will rise, dividends will fall, and share prices will fall. C. Interest rates will fall, dividends will rise , and share prices will fall. D. Interest rates will rise, dividends will rise, and share prices will fall. E. Interest rates will rise, dividends will fall, and share prices will rise.
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