Banks are the main source of funding for mainly because of and .
A)bond holders; risk; asymmetric information
B)governments; adverse selection; uncertainty about the future
C)small firms; adverse selection; moral hazard
D)big firms; adverse selection; moral hazard

Question

Quizplus · Accepted Answer

Small firms often rely on banks for funding due to issues like adverse selection and moral hazard, which make it difficult for them to access capital markets directly. Banks help mitigate these issues by assessing creditworthiness and monitoring borrowers.

Banks Are the Main Source of Funding for Mainly Because