The constraints on commercial banks:
A) are the result of the banking collapse of the 1930's
B) affect the price and allocation of bank credit
C) are designed to reduce risk of failure
D) all of the above

Question

Quizplus · Accepted Answer

The constraints on commercial banks are indeed a result of historical banking collapses, particularly those in the 1930s, which led to the implementation of regulations to prevent future failures. These constraints are designed to reduce the risk of bank failures by ensuring financial stability and protecting depositors' funds. Additionally, they affect the price and allocation of bank credit by influencing lending practices and interest rates.

The Constraints on Commercial Banks