How do banks engage in specialization and division of labor?

Question

Quizplus · Accepted Answer

Banks engage in specialization and division of labor by coordinating the collection of lenders' funds and employing specialists in risk assessment to assure their safety. This allows them to focus on their core function of transforming short-term deposits into long-term loans and efficiently allocating capital to the most productive uses. Option A is incorrect as savers and borrowers have other avenues such as stock investments and bond markets. Option B is partially correct, but banks are not just limited to lending to risky borrowers. Option D is incorrect as the use of ATM cards is just a small part of the banking services.

How Do Banks Engage in Specialization and Division of Labor