Read the following passage carefully and answer the questions based on the passage:
"Bank failures raise serious concerns about supervisory oversight." The case studies of Credit Suisse and Silicon Valley Bank highlight the deficiencies in supervisory supervision. In many instances, supervisors are hesitant to come into conflict with bank management when weaknesses are identified, preferring to do nothing rather than take corrective action at a point in time when key issues are building into a problem.
Regulators must adopt an attitude change in which they place more emphasis on the results rather than the details. Overemphasis on trivial matters might lead regulators to overlook more fundamental issues, such as whether financial institutions have adequate capital in case of a shock. Regulating requirements must be simplified. Complex regulation requirements in relation to capital may overlook systemic risk in their approaches when stress tests result in activities gravitating towards less heavily regulated institutions in the non-bank sector.
Improved supervisory and bank communications would promote better supervision as a tool for managing risk. Recommendations include being up front about supervisory goals, openness to change within the bank organization, and increased transparency in supervisory contracts as a way of promoting swift problem resolution. These would aid shareholders as well as the overall economy. In conclusion, rather than pursuing a micro-management strategy, a move towards a clearly defined regulation that supports positive incentives is what is needed to ensure that banks behave within frameworks that promote financial stability.
Which of the following is most true in regard to stating the structure of logic found in the author's conclusion?
- (a)It proposes that bank managers should be given more freedom in setting.
- (b)It suggests a complete deregulation of the banking system to promote a competitive world economy.
- (c)It urges a transition from procedural pedantry towards a results-oriented strategic framework.
- (d)It suggests that the responsibility for assurance should lie with organizations rather than with outsiders.
Answer
Why
Correct — C. The conclusion reads: 'In conclusion, rather than pursuing a micro-management strategy, a move towards a clearly defined regulation that supports positive incentives is what is needed...'
Its logic is rather than X, a move towards Y — a shift from one approach to another.
X, micro-management, is procedural pedantry. Y is the results-oriented framework, echoing the earlier call for 'more emphasis on the results rather than the details' → option (c).
Why the others are wrong
- (a)It proposes that bank managers should be given more freedom in setting. — The conclusion is about how regulators regulate, not about freeing bank managers, and it keeps regulation, 'clearly defined'. As printed, the option also breaks off at 'in setting'.
- (b)It suggests a complete deregulation of the banking system to promote a competitive world economy. — Complete deregulation contradicts the conclusion's own words: it calls for 'a clearly defined regulation' — a change of style, not the removal of rules.
- (d)It suggests that the responsibility for assurance should lie with organizations rather than with outsiders. — The conclusion still relies on outside regulation, 'clearly defined', to make banks behave. It changes how supervisors regulate, not who is responsible for assurance.
Concept
A structure of the conclusion question asks how the final claim is built, not just what it says.
Signal words give the structure. 'Rather than X, Y' rejects one course and proposes another, and 'In conclusion' marks the sentence that sums up the argument.
Here X is micro-management, the overemphasis on 'trivial matters' criticised in paragraph two, and Y is clear, incentive-based regulation. From X to Y is a transition.
Key facts
- Pedantry is excessive concern with minor details or rules.
- 'Rather than X, Y' marks a preference for Y over X.
- The conclusion keeps regulation and changes its style: clearly defined, with positive incentives.
Study next
Common traps
- Reading criticism of detailed rules as a call for no rules, which is option (b).
- Missing that option (c)'s 'procedural pedantry' is the passage's micro-management in harder words.
The same concluding sentence decides 19 Jan 2026, 11:00 AM, English Q.39, where 'positive incentives' help banks behave in ways that keep the economy stable.
Related PYQs
No directly related past PYQ was found.