Financial intermediaries affect the availability of credit through all EXCEPT which of the following? A) risk...

Financial intermediaries affect the availability of credit through all EXCEPT which of the following?

A) risk sharing among savers.

B) reducing transactions costs.

C) collecting information to mitigate asymmetric information problems D) allowing savers to conduct direct finance transactions.

Solutions

Expert Solution

Answer:

Correct answer is:

D) allowing savers to conduct direct finance transactions

Explanation:

Financial Intermediaries facilitates indirect finance since they get deposits from savers and in turn they (Financial intermediaries) finance entrepreneurs /companies who need finance. As such financial intermediaries affect the availability of credit by allowing savers to conduct indirect finance transactions.

Financial intermediaries affect the availability of credit through:

risk sharing among savers.
reducing transactions costs.
collecting information to mitigate asymmetric information problems

As such option D is correct and other options A, B and C are incorrect

jeff jeffy answered 1 year ago

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