Why is financial stability crucial for the economy?

Understanding Systemic Risks in Banking

Interactive Video
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Business
•
10th - 12th Grade
•
Hard

Patricia Brown
FREE Resource
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10 questions
Show all answers
1.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
It eliminates all risks associated with banking.
It guarantees profits for all banks.
It allows for the proper functioning of the economy.
It ensures that banks can operate without any funding.
2.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is liquidity risk in banking?
The risk of a bank's IT system crashing.
The risk of a bank's management team failing.
The risk of a bank not being able to meet its funding needs.
The risk of a bank not having enough fuel.
3.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How does a bank's lending decision affect its operations?
It has no impact on the bank's balance sheet.
It solely determines the bank's interest rates.
It only affects the bank's reputation.
It influences the growth of its balance sheet and asset quality.
4.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What is governance risk in the context of banking?
The risk of a bank's credit decisions.
The risk of a bank's IT system failing.
The risk associated with a bank's funding sources.
The risk related to the quality of a bank's management team.
5.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
Why are operational systems important for banks?
They allow banks to avoid all systemic risks.
They guarantee that banks will always be profitable.
They help banks operate properly and manage operational risks.
They ensure that banks can lend money without any risk.
6.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
What are cross-sectional systemic risks?
Risks that only occur during economic downturns.
Risks that only affect small banks.
Risks arising from the size and interconnections of banks.
Risks that are completely unrelated to the banking system.
7.
MULTIPLE CHOICE QUESTION
30 sec • 1 pt
How can the size of a bank contribute to systemic risk?
The size of a bank has no relation to systemic risk.
The size of a bank can amplify the impact of its failure.
Smaller banks have no impact on systemic risk.
Larger banks are always more stable.
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