285 $
© 2014 Pearson Canada Inc.$- What are the three pillars that Basel 2 is based on?
Answer: Pillar 1 links capital requirements for large, internationally active banks to three types
of actual risk: market risk, credit risk, and operational risk. Pillar 2 focuses on strengthening the
supervisory process. Pillar 3 focuses on improving market discipline through increased
disclosure.
Diff: 2 Type: SA Page Ref: 217
Skill: Recall
Objective List: 10.1 Explain bank regulation in the context of asymmetric information problems
10.2 The 1980s Canadian Banking Crisis
In the mid-1980s, how many chartered banks failed in Canada?
A) Two
B) Three
C) Five
D) Ten
Answer: A
Diff: 1 Type: MC Page Ref: 225
Skill: Applied
Objective List: 10.2 Characterize the 1980s Canadian banking crisis
One of the reasons for the failure of Canadian Commercial and Northland banks was
____.
A) moral hazard
B) adverse selection
C) the lack of deposit insurance
D) rising oil prices
Answer: A
Diff: 1 Type: MC Page Ref: 225
Skill: Recall
Objective List: 10.2 Characterize the 1980s Canadian banking crisis
The Bank of Credit and Commerce International (BCCI) operated in ____ countries prior
to its collapse.
A) 70
B) 5
C) 70
D) 50
Answer: A
Diff: 1 Type: MC Page Ref: 225
Skill: Recall
Objective List: 10.2 Characterize the 1980s Canadian banking crisis