Question

Explain if true or false and then answer in a paragraph why:

Economic analysis suggests that banks will devise ways around regulations which restrict certain banking activities.

Answer 1

This is actually True. A common problem nowadays is that of Ponzi schemes. This can come about through excessive bank lending without proper background checks. Banks will thus ensure that they restrict certain types of lending to certain customer profiles so that another subprime crisis does not occur. The regulations may not say explicitly what puts a cap on lending but banks can use this to prevent insecure loans from being given out to the wrong customers. This statement is thus True. Banks can use the regulations to prevent Ponzi schemes.