Administrative costs make small loans less profitable than large ones, other things equal.

Name: Administrative costs make small loans less profitable than large ones, other things equal.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

Administrative costs, such as the cost of paperwork and processing, are a fixed cost per loan, and thus make up a larger proportion of the total cost for small loans compared to larger loans. This results in a lower profit margin for small loans.

Administrative Costs Make Small Loans Less Profitable Than Large Ones