3

Which statement below is NOT true if there is a deposit insurance?

Select one:

a. A well designed deposit insurance scheme can prevent bank runs.

b. Insured depositors lack incentives to differentiate between good vs bad banks.

c. Deposit insurance will encourage the management and shareholders of banks to manage liquidity risk more prudently.

d. Deposit holders place in line does not affect his or her ability to obtain the funds.

e. Deposit holders are less likely to panic if there is a perceived bank solvency problem.