Question

Although the fdic was created to prevent bank failures, its existence encourages banks to:______.

Answer 1

Although the FDIC was created to prevent bank failures, its existence encourages banks to take too much risk.

What is Federal Deposit Insurance Corporation (FDIC)?

In order to ensure stability and public confidence in the country's financial system, Congress established the Federal Deposit Insurance Corporation (FDIC), an independent organization. The FDIC administers receiverships, makes large and complex financial institutions resolvable, evaluates and supervises financial institutions for safety, soundness, and consumer protection in order to carry out this mandate.

What is financial system?

A group of organizations that allow for the exchange of money includes banks, insurance companies, and stock exchanges. There are financial systems at the firm, regional, and international levels. In order to finance projects for either personal consumption or productive investments and to seek a return on their financial assets, borrowers, lenders, and investors trade current cash. In order to determine which projects are financed, who finances projects, and the conditions of financial agreements, borrowers and lenders use a variety of rules and procedures that make up the financial system.

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