Which of the following is NOT an economic benefit of depository institutions?
A) They pool risk
B) They borrow long and lend short
C) They create liquidity
D) They reduce the cost of monitoring borrowers

Question

Quizplus · Accepted Answer

Depoititory institutions typically borrow short-term funds from depositors and lend long-term funds to borrowers, meaning they borrow short and lend long. This is not an economic benefit, but rather a characteristic of their business model. The other options (pooling risk, creating liquidity, and reducing monitoring costs) are economic benefits of depository institutions.

Which of the Following Is NOT an Economic Benefit of Depository