In developing countries, it is not true that
A)banks are often viewed with suspicion
B)at the first sign of economic problems, many bank depositors withdraw their funds
C)because banks cannot rely on a continuous supply of deposits, banks cannot make loans for extended periods
D)if financial institutions fail to serve as intermediaries between savers and borrowers, the lack of funds for investment will make growth rates double
E)the credit provided by banks as a percent of total output is one fifth that in high-income countries

Question

Quizplus · Accepted Answer

The statement that if financial institutions fail to serve as intermediaries between savers and borrowers, the lack of funds for investment will make growth rates double is not true in developing countries. This is an incorrect statement given as an option. The other options are valid and reflect the challenges that banks face in developing countries, such as suspicion from the public, difficulties in retaining deposits, and lower credit provision due to limited resources. However, the incorrect statement in option D is the one that makes it the answer to this question.

In Developing Countries, It Is Not True That