7. A longstanding view is that mutual institutions.g., credit unions today or many savings and...
50.1K
Verified Solution
Link Copied!
Question
Finance
7. A longstanding view is that mutual institutions.g., credit unions today or many savings and loun institutions (S&L) several decades ago -are unlikely to take high risks, because their executives cannot get stock options that reward risk taking (they have no traded stock, so no options). The experience of S&Ls in the 1970s and 1980s a. confirms this, they were much less likely to make risky loans than commercial banks were, and they paid lower rates on their deposits, making them safer overall. b. goes against this; they had negative NIMs on old mortgage loans, which they tried to offset by paying high rates to get lots of insured deposits and putting that money into new high-risk loans. c. confirms this: they took so little risk that they grew slower than commercial banks, and their share of the deposit market has been shrinking for decades. d. goes against this, because the S&Ls continued to make 30-year residential mortgages throughout the 1980s even though they lost money on them, increasing their chance of default
Answer & Explanation
Solved by verified expert
Get Answers to Unlimited Questions
Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!
Membership Benefits:
Unlimited Question Access with detailed Answers
Zin AI - 3 Million Words
10 Dall-E 3 Images
20 Plot Generations
Conversation with Dialogue Memory
No Ads, Ever!
Access to Our Best AI Platform: Zin AI - Your personal assistant for all your inquiries!
