Depository institutions are good at minimizing
A) liquidity.
B) the costs of monitoring borrowers.
C) risky borrowers.
D) all of the above

Question

Quizplus · Accepted Answer

Depository institutions have specialized in using economies of scale to minimize the costs of monitoring borrowers. They are able to efficiently and effectively assess the creditworthiness of potential borrowers and manage risk through their experience, expertise, and access to information. While they do also play a role in minimizing liquidity and risky borrowers, these are not their primary strengths.

Depository Institutions Are Good at Minimizing