Asked by Allison Dickinson on Jul 02, 2024
Banks have more expertise than individual households in making loans because banks:
A) lend smaller amounts of money.
B) are regulated by the government.
C) also pay interest to savers.
D) are subject to severe penalties if they make bad loans.
E) make many more loans than individual households do.
Financial Intermediaries
are institutions that facilitate the channeling of funds between savers and borrowers, including banks, investment companies, and insurance companies.
Severe Penalties
Punishments or sanctions that are especially harsh or stringent, typically applied in legal contexts.
- Acknowledge the significance of banks as financial intermediaries in the economic landscape.
- Comprehend the methods banks use to reduce risks and tackle the challenge of asymmetric information.
Learning Objectives
- Acknowledge the significance of banks as financial intermediaries in the economic landscape.
- Comprehend the methods banks use to reduce risks and tackle the challenge of asymmetric information.