Question
As banks increase their equity capital in order to balance the risk in their behavior, the __________ will put pressure on the bank to reduce risk taking.
a. international bank regulators
b. depositors
c. banks’ clients
d. shareholders
e. federal government
a. international bank regulators
b. depositors
c. banks’ clients
d. shareholders
e. federal government
Answers
GPT-4o mini
The correct answer is **d. shareholders**.
As banks increase their equity capital, shareholders typically want to see a return on their investment. Higher equity capital can lead to reduced profits in the short-term if not managed properly, causing pressure on banks to reduce risk-taking behavior to maintain profitability and deliver returns to shareholders.
As banks increase their equity capital, shareholders typically want to see a return on their investment. Higher equity capital can lead to reduced profits in the short-term if not managed properly, causing pressure on banks to reduce risk-taking behavior to maintain profitability and deliver returns to shareholders.