Regulatory arbitrage refers to:

Regulatory arbitrage refers to:
A . the practice of transferring business and profits to jurisdictions (such as those in other countries) to avoid or reduce capital adequacy requirements
B . the practice of structuring a financial institution’s business as a bank holding company to arbitrage the differing capital and credit rating requirements for different business lines
C . the practice of investing and financing decisions being driven by associated regulatory capital requirements as opposed to the true underlying economics of these decisions
D . All of the above

View Answer

Answer: C

Explanation:

The correct answer is Choice ‘c’. The other choices do not refer to ‘regulatory arbitrage’.