Requiring banks to use less leveraging is equivalent to:
A) Expanding the loan portfolio of banks
B) Reducing the banks' reserve ratio
C) Requiring a higher level of bank net worth
D) Requiring banks to accept more deposits

Question

Quizplus · Accepted Answer

Requiring banks to use less leveraging means they must rely less on borrowed funds and more on their own capital. This implies that banks must have a higher level of net worth in relation to their assets. Hence, option C is the correct choice as it requires a higher level of bank net worth. Options A, B, and D are incorrect as they do not address the issue of leveraging.

Requiring Banks to Use Less Leveraging Is Equivalent To