Question

question 34
the primary purpose of deposit insurance is to
protect bank shareholders against losses.
improve the flow of information to investors.
prevent banking panics.
protect bank employees from unemployment.

Explanation:

• "Protect bank shareholders against losses" is incorrect because deposit insurance protects depositors, not shareholders.
• "Improve the flow of information to investors" is not related to deposit insurance's purpose; it's about transparency in financial reporting or other informational mechanisms.
• "Prevent banking panics" is correct. Deposit insurance (like FDIC in the US) protects depositors' funds, which reduces the likelihood of bank runs (where depositors rush to withdraw money out of fear), thus preventing banking panics.
• "Protect bank employees from unemployment" is not the purpose of deposit insurance; it's not related to employee job security.

Answer:

C. prevent banking panics.