Insurance mechanism encourage banks to take on too much risk

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Reference no: EM131590101

Why might deposit insurance mechanisms (like the FDIC) encourage banks to take on too much risk? Is deposit insurance, then, a bad idea? Briefly explain.

Reference no: EM131590101

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Insurance mechanism encourage banks to take on too much risk : Why might deposit insurance mechanisms (like the FDIC) encourage banks to take on too much risk?

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