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Why do commercial banks hold equity close to the minimum required by regulators? Because regulators assess fines if equity - to - assets is too

Why do commercial banks hold equity close to the minimum required by regulators?

Because regulators assess fines if equity

-

-

assets is too large

Due to the low cost of obtaining deposits

Intense industry competition among small banks forces equity to the minimum

Competition from commercial paper erodes banks' deposit base

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