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Question 20 5 pts What is the drawback of deposit insurance? Deposit holders are less likely to panic if there is a perceived bank solvency
Question 20 5 pts What is the drawback of deposit insurance? Deposit holders are less likely to panic if there is a perceived bank solvency problem. Deposit insurance does not deter contagious runs and panics. Deposit holder's place in line affects his or her ability to obtain the funds. Even when the Dl is in trouble, the deposit holder has no incentive to run. Dls are more likely to increase the liquidity risk on their balance sheets
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